CHAPTER I

THE PROBLEM AND ITS SCOPE

INTRODUCTION

Rationale of the study

Good health is a secret of every happy man. A person can’t do his job in

school or work if he doesn’t feel well. One should be both physically and

emotionally healthy for when a person is healthy his body and mind function as

they are supposed to. Being unwary to a healthy lifestyle can make way for health

problems like obesity, nutritional deficiencies, and several chronic diseases.

Making small changes in your diet can go a long way and it’s easier than

you think. By taking steps to eat healthily, a person will be on his way to getting

the nutrients his body needs to stay active, and strong.

One way of making small changes in a person’s diet is by drinking

smoothies. Somewhere along the way, health food took liquid form, and that

includes the smoothie which is a thick beverage made from blended raw fruit or

vegetables with other ingredients such as water, ice or sweeteners. Smoothies are

a great, simple way to get in the extra nutrition a person needs.

The Calabash Fruit (Crescentia cujete) or Miracle Fruit to the few people

who know of their existence is a large spherical fruit. The study “Antiangiogenic

Activity and Toxicity of Cresentia cujete. (Calabash)” was conducted by Jaime P.

Guerrero, March JaneO. Palermo, Abigail U. Cellona, biology students of Notre

Dame of Dadiangas University in General Santos City and was declared 3rd place

1
in the DOST-PCHRD Gruppo Medica award for Outstanding Undergraduate

Thesis in Herbal Medicine. The results of the study show that leaves of Cresentia

cujete (Calabash) possesses significant free radical scavenging properties

compared with stem bark and a clear correlation exists between the antioxidant

activity and phenolic content. These radicals help to perform physiological

functions of the body. Scientific evidence suggests that antioxidants reduce the

risk for chronic diseases including cancer and heart disease.

Thus, to relate to the 21st century, wherein everyone is exposed to the

severe effect of climate change on human health, the researchers have decided

that making a smoothie out of a calabash fruit, which is considered a herbal

medicine, is a fitting way to do. This study is entitled "A Proposed Production and

Distribution of Calabash Smoothie." Because of the benefits that the Calabash

Fruit has the researchers decided that the fruit be the main ingredient in the

proposed product.

2
 STATEMENT OF THE PROBLEM

The purpose of this study was to determine whether the proposed

production of Calabash smoothie and its distribution in the Cebu City Sports Center

would be feasible or not.

Specifically, the following questions were answered:

1. Is the Proposed production and distribution of the Calabash Smoothie

feasible under the following aspects:

1.1 Technical;

1.2 Marketing;

1.3 Management;

1.4 Legal & Taxation;

1.5 Financing;

1.6 Financial;

1.7 Social Economic Desirability; and

1.8 Strength, Weaknesses, Opportunities, and Threats

2. Based on the findings, what recommendations maybe proposed for the

project?

3
 SIGNIFICANCE OF THE STUDY

The findings of this study will open up the need for a healthy yet refreshing

drink for the human society which leads the way for the product of this study to be

introduced. The following benefactors will gain knowledge about the health

benefits of the Calabash Smoothie:

Prospective Investors

Their decision to put up the proposed business near the Cebu City Sports

Center is not solely for the reason of putting up an additional store but also for the

consumers to have access of the calabash drink and its benefits. This study will

address the queries of the prospective investors regarding the said product in the

market and the prospected risks and benefits relative to the product. Hence, this

study will provide them with the useful information they need to judge whether the

said project is feasible or not. This study will then be a medium that will help

facilitate the decision-making process.

The Respondents

As decision makers, the respondents had the opportunity to gather

information needed in deciding whether or not they would purchase and drink the

smoothie. They will be aware of the possible health benefits of drinking the

Calabash Smoothie, and these benefits will motivate them to start living a healthy

lifestyle as they age throughout the years and gain the desirable results they plan

to achieve. But mostly, they will be reminded of how important it is to take care of

one’s health.

4
Government

The study will provide awareness of the possible health benefits of drinking

Calabash smoothie and include this drink to their approved drinks for a healthy

lifestyle for the community. Moreover, this study will inform the government on how

Calabash has a positive effect on the human body, especially on the respiratory

system, which is apparently one of the many issues that the government is trying

to resolve.

Proponents

This study enabled the researchers to apply what they have learned in their

degree program, Bachelor of Science in Management Accounting, as they went

through with the development and interpretation of the data and its implication.

During the process of the study, the researchers also learned the value of

teamwork, understanding, patience, diligence, and time management, thereby

developing their personality and enhancing their skills in dealing with their peers

and with the pressure that they may experience in the workplace of their profession

they are soon to be employed.

Future Researchers

This study would serve as reference to the future researchers as they

engage deeper to their research. They will be aware of the other possible issues

related to the study that will enrich their endeavor. Through this study, they will be

able to find solutions to the said issues and innovate the product of the study

further. As they will also learn the value of teamwork, understanding, patience,

diligence, and time management, thereby developing their personality and

5
enhancing their skills in dealing with their peers and with pressure that they may

experience in the workplace of their profession they are soon to be employed.

RESEARCH DESIGN

The research design provides a detailed systematic plan of the study that

the researchers have established to integrate the different components of the

study. It is essential for the collection, measurement, and analysis of data and

evidence gathered in order to efficiently address the study.

Research Environment

The focus of the study is the health enthusiasts who are active in

maintaining their healthy lifestyle. The basis of the selection of the research

environment is where the health enthusiasts are commonly found. The best ground

for conducting the study is the Cebu City Sports Center. Because of its accessible

location and facilities, the sports center has encouraged many people of different

ages to take an interest in sports and live a healthier lifestyle. The researchers

found a place along Cebu City Sports Center which is a perfect setting area for the

beverage store. It is also accessible for patients and medical practitioners that are

coming from St. Vincent’s General Hospital who might wish to avail the proposed

product. The area covered in the study is in the figure below.

6
 Figure 1

The Map of the Area Surveyed

Research Method Used

The proponents of the study used the descriptive survey method in

gathering data and information needed for the accomplishment of the study. This

method involves direct contact with the target market by asking questions or giving

out questionnaires to be answered and tabulating their answers afterward. This

way of gathering data is very common to researchers. The goal is to collect

information about a large population by surveying a sample of it. After conducting

the survey, the proponents will summarize all answers of the respondents

regarding percentage, the quantity of the same response by the different

proponents, and frequency and average. The respondents’ answers will vary from

one person to another because of different preferences, taste and believes of each

person.

7
Research Respondents

A sample is a selection of respondents that represent the total population.

The respondents of the study were the health enthusiasts who are goers in the

Cebu City Sports Center. The population in the area is undeterminable because it

is confidential. If the estimated population is equal or greater than 1,000,000, the

required sample size is 385 as per advised by the university statistician.

Instruments being used

The researchers made a questionnaire containing the defined queries about

the views and opinions of the respondents. These were distributed to gather data

from the population. The questions that were formulated to provide the exact and

appropriate answers that are related to the study. The survey questionnaires are

given to the fixed amount of the total sample size of the population.

Data Treatment

The proponents, after gathering all the questionnaire, tabulation and

presentation, results were made, and responses regarding frequency, average

and, percentages are presented. The answers of the respondents vary because of

each person’s taste, preference, and beliefs.

8
 LIMITATIONS OF THE STUDY

Each study has restrictions that the researchers will come across and will

vary from one study to another. But these will not be much of a hindrance to the

success of the study. The following are the limitations of this study:

Availability of Resources and Data

The researchers were unable to gather the exact and reliable data and

information regarding the number of people that avails the Cebu City Sports Center

utilities because of confidentiality according to the management.

Unresponsive respondents

During the survey, there are people who are unwilling to give the

researchers the opportunity to gather data. Forcing them to answer the

questionnaires is contrary to their will and is considered unethical.

Estimation of Figures

Since the researchers are still students, they cannot accurately estimate the

costs and forecast. So, there might be variances between the estimated or

budgeted and the actual costs of this study.

9
 DEFINITION OF TERMS

The study has words and terminologies that are maybe not commonly

encountered by the readers as they go through the pages of this book. For the

readers to comprehensively understand these terms, these are defined:

Hemoglobin

It is the protein molecule in red blood cells that carries oxygen from the

lungs to the body's tissues and returns carbon dioxide from the tissues back to the

lungs.

Flavonoids

It is a substance in fruit and vegetables that may help protect people against

cancer or heart disease.

Phytochemicals

This term refers to the chemicals that are produced by plants.

Quercetin

It is used as a food supplement to reduce allergic responses or boost

immunity.

Anthraquinone

It is an aromatic organic compound that is often used to relieve constipation.

Antiangiogenic

It refers to the substance that inhibits the growth of new blood vessels.

Phenolic/Phenols

It is closely associated with the sensory and nutritional quality of fresh and

process plant foods.

10
 CHAPTER II

TECHNICAL ASPECT

Success for business comes with hard work and risk. Extreme planning and

control are very imperative in creating a decision to achieve an effective and

successful business. A careful study is also mandatory to know the steps in

achieving success in the firm. Technical aspect consists of information of the

proper planning and processes for the production and distribution of the proposed

product. This chapter determines the information about production such as the raw

materials, tools, equipments, and facilities which are needed.

The technical aspect is one of the crucial phases of this study because it

contains the production flow and activities of the business. It also consists of how

much is the cost in producing the proposed product. This chapter is the foundation

of the study.

PRODUCT DESCRIPTION

Calabash is an ornamental tree that produces a large, hard and green-

skinned fruit that takes about six months to ripen. The fruit is a popular folkloric

medicine in treating many illnesses, when extracted into juice. Aside from its

healing properties, its shell is being used for ornamental decorations and musical

instruments due to its thick and hard texture.

The Calabash Smoothie is a refreshing beverage made from blended

calabash juice, fresh chunked pineapple, crushed ice, low-fat milk and brown

Sugar. The drink contains Vitamin B1 which is essential for the breakdown of fat

11
and protein and responsible for energy production and improves brain function;

Vitamin C which is necessary for the growth, development and repair of all body

tissues; calcium which builds and maintains strong bones; potassium which is

crucial to heart function and plays a role in skeletal and muscular contraction; and

as well as iron which helps metabolize proteins and play a vital role in the

production of hemoglobin and red blood cells. Also, the Calabash fruit contains

flavonoids such as quercetin and anthraquinone, the significant phytochemicals

for antiangiogenic activities, a process that inhibits the growth and development of

new blood vessels in the body which could be used to help prevent the spread of

cancer cells in the human body.

The combination of calabash and pineapple is a great way to introduce the

product to the public as it produces a lot of benefits that promote a healthy lifestyle

to people.

The product is available in Pineapple flavor since it has a complementary

mixture that makes it a satisfying thirst quencher. Pineapple provides Immune

System Support and can also help reduce severe inflammation, tumor growth and

the risk of macular degeneration. The product has a unique taste which will be

extraordinary to the taste buds of the public. Apparently, pregnant women are

highly discouraged to consume the product as it induces labor. Overall, the product

is a healthy thirst quencher that will help individuals to increase health satisfaction.

12
 THE PRODUCTION FLOW

In the production of a product, it is essential to follow the procedures for the

creation of the said product. The production flow of this study will serve as the

guide for the proper production of the product. Thus, the researchers developed

procedures on how to create the proposed product of this study. It involves a

sequence of steps for its proper production and taste. It will also determine on how

successful the result of the study if the flow is carefully followed.

Preparation of Raw Materials, Tools, and Equipments for the process of the

Calabash Juice

The raw materials is prepared by the persons on duty for the creation of the

Calabash Juice. The only raw material that is to be prepared is the Calabash Fruit

since it is the main ingredient of the proposed product. First, the fruit will be

inspected by the workers for around 2 minutes to ensure that it is not rotten.

Second, the tools: hammer, ladle, spoon, strainer, large and small pots, and wine

bottle, are to be gathered and cleaned to ensure the hygiene.

Production of the Calabash Juice

Step 1

Break the shell of the fruit using a hammer in opening it since it is thick and

won’t break without difficulty, but do not swing the hammer hard for it will sink into

the fruit’s insides.

Step 2

Scrape the inside contents of the fruit, which are white and in pulpy texture,

and place them in a smaller pot for storage.

13
Step 3

Transfer all inside contents of the fruit into the large pot to prepare it for the

boiling step of the process.

Step 4

Boil the pot under low heat to control its temperature. Stir continuously and

observed the color until it becomes dark purple. Wait for about thirty minutes until

the white pulpy texture becomes refined.

Step 5

When the juice is now ready for extraction, set it aside first for around 8

minutes to cool it down. Then use the strainer to separate the remaining residue

of the juice.

Step 6

Transfer the juice in the wine container after its separation from its residue.

Step 7

Place it in the refrigerator to keep it chill.

Preparation of Raw Materials, Tools, and Equipments for the process of the

Calabash Smoothie

The raw materials, tools, and equipments are prepared by the worker on

duty for the day. First, the worker will gather and arrange the raw materials:

calabash juice, honey, ice, pineapple, low-fat milk, and check if it the raw materials

are still fit for use. Second, the worker will prepare the blender, ice crusher,

measuring tools and packaging materials for the day. Make sure that the tools and

equipments will still be fit for the production of the product for the day.

14
Production of the Calabash Smoothie

Step 1

Sanitize the tools and equipment equipments properly before starting the

process. Other raw materials such as pineapple chunks, crushed ice, honey and

low-fat milk are placed in a clean container and shall be regularly inspected to

avoid contamination of harmful substances.

Step 2

The blender is prepared by mixing all the ingredients. Place inside the

blender, all the ingredients necessary which include: the calabash juice, pineapple

chunks, crushed ice, honey and low-fat milk.

Step 3

Mix all the ingredients in the blender and wait until it will turn into a clear

texture.

Step 4

In the final and last part of the production, place the smoothie inside the

plastic cup packaging and insert a straw for the consumer to take a sip and enjoy

the product. Serve it cool and chill. The full phase of completing the production of

juice is one hour; while in making the smoothie is about three to five minutes.

15
 Figure 2

Production Flow of Calabash Juice

Step 7. Chill it in the refrigerator Step 1. Break the shell of the fruit

Step 6. Transfer the juice to the wine bottle

Step 2. Scrape the contents

Step 5. Let it cool down and strain

Step 3. Transfer it to a large pot
to extract more juice

16
Step 4. Boil it under low heat
 Figure 3

Production Flow of Calabash Smoothie

Step 1 Step 2

Prepare the raw materials, Proper sterilization of the tools

equipments and tools and equipments

Step 4
Step 3
Put the main ingredients inside
Prepare the blender for use
the blender

Step 5 Step 6

Mix all the ingredients using the Put the smoothie in a plastic cup
blender

Figure 4.0

Ingredients for Each Production Cycle

1/8 cup of Calabash Juice

4 tbsp. of Brown Sugar

1 12oz cup

12oz cup of Crushed Ice of

Calabash Smoothie
½ cup of Low-Fat Milk

½ cup of Chunked Pineapple

17
 RAW MATERIALS

Raw material is the ingredient of the product that is still in its original and

unprocessed or semi-processed state. It is the main input used for the production

of the product. These inputs are the essential part of the product for they will

determine on how successfully the product will result into.

Calabash

A fruit that is the main ingredient for the proposed

Calabash Smoothie which is available in the whole Philippines.

Here in Cebu, it is available in Lilo-an which costs P100.00- Figure 5

Calabash
P300.00 depending on its size.

Crushed Ice

A frozen liquid made out of purified water used to mix all

the ingredients and is available in all supermarkets and various

ice selling business in the Philippines. Metro Gaisano

Supermarket P50.00 on a 5kg pack. Figure 6

Crushed Ice
Low-Fat Milk

A fresh liquid substance that came from the cow’s milk.

After it is processed, it will be purchased from Nestle Low-Fat Milk

that is sold in various department stores. The emphasis on lower-

fat milk has to do with avoiding the extra calories and saturated

fat of whole milk. Metro Gaisano Supermarket P70.00. Figure 7

Low-Fat Milk

18
Pineapple

A large, juicy tropical fruit that is used to add the sweet

pineapple flavor to the smoothie. This is sold in various stores in

the Philippines. Metro Gaisano Supermarket P45.00 per kilo.

Figure 8
Pineapple
Brown Sugar

It is made of crystalline sucrose combined with a small

amount of molasses, which is responsible for its characteristic color

and rich flavor. Metro Gaisano Supermarket P46.00 per kg pack

Figure 9
Brown Sugar
TOOLS, MACHINERIES AND EQUIPMENTS

In order to process and create the proposed product there are tools,

machines and equipments that will be necessary for its completion. Each one of

them is essential to the success of the business.

Blender (BY767A Heavy Duty Blender)

Equipment used to mix up all the ingredients that can be bought

in appliance stores and department stores inside different malls in the

Philippines. SM Appliance Center P3,800.00.

Figure 10
Blender

Measuring Cup

A kitchen tool used to measure accurately the volume of all

of the ingredients of the product. Metro Gaisano P79.00

Figure 11
Measuring Cup

19
Disposable Plastic Cup

This is used to be the container of the final product before

serving to the customers. Carbon Market P3.00

Figure 12
Disposable Cup
Fire Extinguisher

A fire extinguisher is an active fire protection device used to

extinguish or control small fires, often in emergency situations. Cebu

Atlantic Hardware P4,400.00

Figure 13
Fire Extinguisher
Straw

This is used for the customers in order for them to sip in and

enjoy the product. Carbon Market P0.50

Figure 14
Straw

Refrigerator (Hanabishi)

A kitchen machine used to store up and cool the ingredients

that can be bought in appliance stores inside different malls in the

Philippines. SM Appliance Center P4,300.00

Figure 15
Straw holder Refrigerator

This is used to store the straws that are to be used by the

customers. Metro Gaisano P200.00

Figure 16
Straw Holder
20
Kitchen Sink

A kitchen tool used to clean the tools and equipments that

are used in the production of the product. Cebu Atlantic Hardware

P2,500. Figure 17
Kitchen Sink
Apron

It is a garment that is worn over the clothing to protect one’s

clothes from incidental stains and marks and dangers like excessive

heat. Gaisano Metro P25.00

Figure 18
Apron

Mono block Chair

This will be used by the employee working in the store for

him to sit on during long hours of working. Cebu Atlantic Hardware

P425.00
Figure 19
Mono Block Chair

Microwave Safe Containers

Containers keep everything tidy and easier to find. It is

where the pineapple chunks will be stored. Metro Gaisano P28.00

Figure 20
Microwave Safe Containers
Chopping Board

A kitchen tool that is used as a surface for foods

being cut with knives. Metro Gaisano P150.00

Figure 21
Chopping Board

21
Emergency Light

An emergency light is a battery-packed lighting device that

switches on automatically when a building experiences a power

outage. This is to be used for emergency purposes. Cebu Atlantic

Figure 22
Hardware P1,299.00. Emergency Light

Exhaust Fan

It is used to provide cooler air and eliminate humidity in the

cooking area. Cebu Atlantic Hardware P1,500.00

Figure23
Bowl Exhaust Fan

It is a round container with a wide uncovered top. It is where

the scraped Calabash meat is put. Metro Gaisano P85.00

Figure 24
Cooler Bowl

It is wherein the crushed ice will be stored. Metro Gaisano

P300.00.
Figure 25
Cooler
Garbage Can

The garbage can is used for temporarily storing waste. Metro

Gaisano P175.00

Figure 26
Garbage Can

22
Funnel

It is used to transfer the Calabash juice to the glass bottles to

avoid spillage. Metro Gaisano P50.00

Figure 27
Funnel
Gas Stove

Fire-emitting equipment that uses gas as a fuel source. It is

wherein the Calabash meat is boiled. Metro Gaisano P1,223.00

Figure 28
Gas Stove
Ladle

A kitchen tool that is mostly used for liquid and deep pots for

proper stirring of its contents. Metro Gaisano P50.00

Figure 29
Ladle
Pots

A kitchen tool used to boil the fruit extracts of the Calabash

Fruit to turn it into Calabash Juice to be mixed with the other

ingredients. Metro Gaisano P630.00

Figure 30
Pots
Sanitary Gloves

It is use by employees to prevent direct contact with foods.

Metro Gaisano P125.00

Figure 31
Sanitary Gloves

23
Sanitary Mask

Used to cover the mouth of the workers in order to

effectively block various invisible germs and foreign substance.

Metro Gaisano P50.00

Figure 32
Sanitary Mask

Serving Spoon

A utensil consisting of a small shallow bowl, oval or

round, at the end of a handle. The serving spoon is used to

scrape the meat of the Calabash fruit. Metro Gaisano P150.00

Figure 33
Serving Spoon

Strainer

A kitchen tool used to separate the liquid from the

remaining small particles of extracts of the Calabash Fruit.

Metro Gaisano P50.00

Figure 34
Strainer

Hair Net

It is used by the workers to keep their hair contained. Metro

Gaisano P12.00
Figure 35
Hair Net

24
Kitchen Towel

It is an absorbent cloth for wiping or drying. Metro

Gaisano P50.00performance.

Figure 36
Kitchen Towel

PRODUCTION CAPACITY
Production Capacity is the volume of production that can be achieved by a

business in a given period using current resources. Through the estimation of the

production capacity, the allocation of resources will be easily facilitated. An

insufficiency may occur if resources are not properly allocated resulting to an

unsatisfactory in the performance.

Table 1

Annual Number of Working Days

Weekly No. of No. of No. of Annual No.

Holidays
Year No. Of Weeks in a Months of Working
Working Month in a
Days Days
Year

(a) [(a*b*c)-d]
(b) (c) (d)

1 6 4 12 18 270

2 6 4 12 18 270

3 6 4 12 18 270

4 6 4 12 18 270

5 6 4 12 18 270

25
 Table 1 displays the total number of working days in a year to determine the

total number of units to be produced per annum.

Table 2

Production Capacity

Daily Production Capacity Annual Production Capacity

No. of Bottle Measure of Production per No. of Working Production per

(mL) Cup day (in a cup) Days annum

(mL)

(A) (B) (C= A/B) (D) (C*D)

1,000 29.57 34 270 9180

Since the actual demand is not known, an estimation to increase the

production annually by 5%.

26
 Table 3

Projected Production Capacity for the Next 5 Years

Year Total Units Produced

Per Annum

2019 9,639

2020 10,121

2021 10,627

2022 11,158

2023 11,716

The projected production capacity for the next five years is increased by

5%. It is computed by:

Year 1= 9,180*1.05= 9,639 units Year 2= 9,639*1.05= 10,121 units

Year 3= 10,121*1.05= 10,627 units Year 4= 10,627*1.05= 11,158 units

Year 5= 11,158*1.05= 11,716 units

27
 PLANT LOCATION

Figure 37

Map site of the Store

Figure 38

Location Site of the Store

28
 Calabash Smoothie is renting a small store space located in Jones Avenue

Brgy. Sambag 1 Cebu City. The location of the enterprise is important in

determining the success of the business. There are different factors in determining

the plant location for a business. Plant location refers to the “choice of region and

the selection of a particular site for setting up a business or factory.” Choosing a

plant location is made after considering the cost and benefit of other alternative

sites. Selecting the ideal location from several choices is based on the

consideration of the cost, market share, and risks.

One of the advantages of having the Calabash Smoothie in Jones Avenue

Brgy. Sambag 1 Cebu City is that the location is near the Cebu City Sports Center,

St. Vincent’s General Hospital and Abellana National High School. This particular

place is also a residential area. Marketing towards families who wants to enjoy

smoothies but don’t want to go too far can be effective. It can be a challenge in

terms of exposure to other markets. People who do not reside in this particular

area or do not have reason to go in this area might discourage them in visiting

Calabash Smoothie. But this remains as the optimal choice of location regarding

cost. Renting commercial spaces in the downtown area of Cebu would cost a lot

more than its current location.

29
 UTILITIES

All business requires utilities to operate. Utilities like electricity, water, and

others play a vital role in the daily operations of a business. The proposed plan

would need the following:

Electricity

Lighting, ventilation and various electronic devices are to be used in the

business’ daily operations, and these ultimately need electrical power. This would

be provided by the Visayan Electric Company (VECO)

Water

The water is primarily used in the sanitation and preparation of the tools and

equipment. This would be provided by the Metropolitan Water District (MCWD).

WASTE DISPOSAL MANAGEMENT

The protection of the environment and the health of the population should

always be given importance. Taking into account the personal hygiene of people,

waste disposal must be taken seriously for proper waste disposal could not only

help the environment wherein the business is located, but also the environment as

a whole. The proposed plan should abide by R.A. 9003, or the Ecological Solid

Waste Management Act of 2000. This act aims to establish segregation among

garbage and wastes such as the following:

Biodegradable Wastes

Biodegradable wastes include any organic matter which is capable of being

broken down by the action of bacteria or other living organisms; these include the

30
shell of the Calabash fruit, pineapple rinds, and paper cups. These biodegradable

wastes are to be put in a trash bag which will be collected every day by a garbage

truck provided by the city government.

Non-biodegradable Wastes

Non-biodegradable wastes are the type of wastes that cannot be

decomposed or dissolved by natural agents. These include excess and damaged

plastic sachets, gloves, mask, straw and other non-decaying wastes that are part

of the daily business operations. Like the biodegradable wastes, non-

biodegradable wastes are to be put in a trash bag and will be collected every

Saturday or Sunday by a garbage truck provided by the city government.

Sanitation

Sanitation should be developed and applied in producing the proposed

product. Policies must be taken into action to maintain the cleanliness of the area.

The working area, especially the tools and equipment, shall be regularly sterilized

and sanitized. Also, before the production starts, the workers are required to wash

their hands and wear gloves, mask, apron, and hair-nets to maintain the

cleanliness.

31
 CHAPTER III

MARKETING ASPECT

Marketing is an act of the selling and promoting products or services

including market strategizing and advertising. It is what the business does to

acquire customers establish and maintain both supplier and customer relationship

for successful business transactions. This chapter will tackle who are its target

market, the projected demand and supply, and product’s marketing schemes like

pricing, the channel of distribution and other marketing strategies will be identified.

TARGET MARKET

A target market is a specific group of consumers that aligns with the

business’ nature of the product. Identifying and choosing a target market is an

essential step in the accomplishment of feasibility studies. Studying the group of

consumers will effectively raise the feasibility and success of the study since they

will be the focus in selling the product. Thus, having a specific group of consumers

that the study is aimed for the accuracy of the demand and possibly supply is

essential.

The target market for the “Proposed production of Calabash Smoothie and

its Distribution” are the health enthusiast joggers, athletes and customers at the

Cebu City Sports Center near Abellana National High School. The proponents

chose this group because the calabash fruit that is to be used in the smoothie is

rich in nutrients like Vitamin B1 (Thiamine), Vitamin C (Ascorbic Acid),

Carbohydrate, Protein, Calcium, Iron, Potassium, Sodium and Fat and could help

32
prevent major diseases, such cardiovascular diseases, and certain cancers. The

business location is also close to the St. Vincent General Hospital. For this reason,

the demand for a unique and nutritional beverage is in demand. Filipinos are free

spirited people who like to explore and experience something new. With this,

Miracle Smoothie will make its way to the industry catering the demands by offering

nutritious drink and innovating the typical smoothie that the Filipinos frequently

consume.

DEMAND

The product’s demand comes from the consumer’s willingness to buy a

product. Its quantity depends on different factors of consumers’ needs,

preferences, income level, self-satisfaction and prices of the product’s competitors.

It is very important to know the demand for the product to determine the profitability

and capacity of the business. A well-estimated demand will provide the necessary

data in making decisions of production of the product.

A survey was conducted to determine the demand of the proposed product,

and the results are in the tables in the succeeding pages.

Table 4

n = 385

Responses on whether or not the respondents drink smoothie

Responses Number of Percentage

Respondents
Respondents who drink
263 68%
smoothie
Respondents who don’t
122 32%
drink smoothie
Total 385 100%
33
 According to the data presented, 68% of the total respondents drink

smoothie. But this data would not affect the success of the study since this question

is just to identify the respondent’s general knowledge about liquids. This table is

presented for informational purposes only. It does not affect the forecasts of the

study.

Respondents’ familiarity with the Calabash Fruit

The Calabash Fruit is much more known as “Miracle Fruit” in the

Philippines. It is termed as such because of the health benefits it offers. This

question will aid the proponents about the respondents’ knowledge of the calabash

fruit.

Table 5

n = 385

Respondents’ familiarity with the Calabash Fruit

Responses Number of Percentage

Respondents
Respondents who know
158 41%
the calabash fruit
Respondents who did not
227 59%
know the calabash fruit
Total 385 100%

According to the data, only 41.00% are aware of the calabash fruit and the

majority of the respondents are not aware of it and its nutrients. This data would

mean that good promotion activities need to be done by the prospective

implementers and this project be implemented.

34
Respondents’ Interest in trying the Calabash Smoothie

The respondents’ interest in trying the product will aid the proponents in

determining whether they will buy or not depending on other factors and

preferences of each individual respondent.

Table 6

n = 385

Respondents’ Interest whether to try or not the Calabash Smoothie

Responses Number of Percentage

Respondents
Respondents who are
339 88%
interested to try
Respondents who are
45 12%
not interested to try
Respondents who did
not cooperate in the 1 0%
survey
Total 385 100%

According to the data, 88% of the respondents are interested in trying out

the Miracle Smoothie. This finding is a good indicator that a big majority of the

respondents are interested to buy the product, after which they may like it and

become a customer.

Respondents’ willingness to purchase the Calabash Smoothie at P59.00

It is important to identify the location of the business since it is one factor

that would affect the consumer’s decision to buy or avail a product or service. This

will aid the proponents whether a location near the area will affect their willingness

to avail the product and satisfy their needs.

35
 Table 7

n = 339

Willingness of the Respondents to Purchase the Miracle Smoothie.

Responses Number of Percentage

Respondents
Respondents who are
willing to purchase the 317 94%
product
Respondents who are
not willing to purchase 20 6%
the product
Respondents who did
not cooperate in the 2 0%
survey
Total 339 100%

According to the data presented, 94% of the respondents are willing to avail

the Miracle Smoothie putting up a stall near the vicinity where they would jog and

exercise.

Respondents’ opinion on the product’s price

Price is one of the major factor to be considered when buying a product or

availing a service. This question will aid the proponents whether the projected price

for the product is reasonable or not

36
 Table 8

n = 317

Whether or not P59.00 per cup is a reasonable price for this product

Responses Number of Percentage

Respondents
Respondents who agree
that the price is 276 87%
reasonable
Respondents who
disagree that the price is 41 13%
reasonable
Total 317 100%

According to the data presented, 87% of the respondents are willing to buy

a 12oz Miracle Smoothie at a price of P59.00.

Respondents’ frequency on patronizing the product weekly

There are chances that the respondents would go back to the area where

the store is located since it is accessible to all. This will aid the proponents in

determining the frequency or total number of units expected to be sold during the

week.

37
 Table 9

n = 276

Approximate cups of miracle smoothie that is possible to be sold per week

Times a week Frequency Total

1 40 40
2 70 140
3 55 165
4 17 68
5 33 165
6 5 30
7 19 133
8 3 24
10 12 120
Total 254 885
Average 3 cups per week

Due to some unrealistic findings during the survey, the proponents decided

to minimize the estimated consumptions per week of the respondents. Because of

this, twenty-two answers from the respondents were disregarded. The proponents

decided to patronize only the results within the range of 1-10 cups.

Based on the data collected, an average of 885 units of the Calabash

Smoothie are expected to be sold for each week of operation. An average of 3

units of the product per week will be purchased by each person depending on their

frequency of going to the area.

38
 PROJECTED ANNUAL DEMAND

A forecasting of annual demand will depend on the calculated data in

current population. The population being undeterminable, charges in the projected

population cannot also be determined, thus the proponents assumed it to be

constant as shown in the table.

Table 10

Population in the Current Year

Year Population

2017 10,000*

*The estimated ten thousand population of the current year is assumed

because the data is undeterminable and numerous people are going in and out of

the center every day from five in the morning until nine in the evening. Even the

NSO has no established population regarding this matter. For that, this will be used

for the projected annual population.

Table 11

Average Annual Desired Quantity

Average Weekly No. of working No. of working Average Annual

Consumption days per week days per year Desired Quantity
[(A/B)*C]
A B C D
3 6 270 135

39
 Table 12

Projected Annual Demand

Year Population Willingness Willingness Average Projected

(Table 9) of the buyer of buyer to Annual Demand
to try the buy the Desired
calabash product at Quantity
smoothie the price of (Table
(Table 5) P59 10)
(Table 7)
(A*94%) (B*87%) (C*D)
A B C D E
2019 10,000 9,400 8,178 135 1,104,030
2020 10,000 9,400 8,178 135 1,104,030
2021 10,000 9,400 8,178 135 1,104,030
2022 10,000 9,400 8,178 135 1,104,030
2023 10,000 9,400 8,178 135 1,104,030

SUPPLY

Supply refers to the total amount of goods that is made available to

consumers at a given time. It represents the entire relationship between the

quantity available for sale and all possible prices charged for that good. Some

identical products of the proposed calabash smoothie is Slurpee and substitute

products include soft drinks and juice. Both similar and substitute products are sold

in 7/11 convenience store, Elizabeth Mall, Jollibee, McDonalds and other micro-

transaction businesses selling beverages. These are considered a direct

competitor of the business. Maximizing profit is what all business aims for. To do

this, the number of supply of a competing identical or substitute products should

be known because in doing so, an effective and efficient calculation and application

of the production capacity can be made.

40
 PROJECTED ANNUAL SUPPLY

Product supply of similar types of products in the market is essential for the

forecasting of the annual supply of the proposed product for this study. A forecast

of the annual supply of the product is made by the computation of the gathered

data from the respondents of the chosen target market. The proponents assumed

that 97% of the demand will be provided by the existing competitor, which is the

7/11 convenience store, Elizabeth Mall, Jollibee, McDonalds and other Micro-

Transaction businesses that are selling beverages by the reason that they are

already known and patronized by the people. Considering the principle of

conservatism, the proponents assumed a decrease of 2% in the market share of

the competitors every year because the product will be then recognized by the

market and it will result to them shifting to the Miracle Smoothie that contains more

health benefits, as shown in the next table.

Table 13

Projected Annual Supply for the Next Five Years

YEAR PROJECTED COMPETITOR’S PROJECTED

DEMAND MARKET SHARE SUPPLY
(Table 11) (A*B)
A B C
2019 1,104,030 97% 1,070,909

2020 1,104,030 95% 1,048,829

2021 1,104,030 93% 1,026,748

2022 1,104,030 91% 1,004,667

2023 1,104,030 89% 982,587

41
 PROJECTED DEMAND AND SUPPLY GAP ANALYSIS

The demand and supply gap analysis are made to establish the market

share of the proposed product. It is the difference between the projected demand

and the projected supply. The gap aids in the determination of the market share of

the proposed product and its capability to go through the existing market. This table

presents the information from the gap analysis made.

Table 14

Projected Demand-Supply Gap for the Next Five Years

PROJECTED PROJECTED DEMAND-SUPPLY GAP

DEMAND SUPPLY
YEAR
(Table 11) (Table 12) (A-B)
A B C
2019 1,104,030 1,070,909 33,121

2020 1,104,030 1,048,829 55,201

2021 1,104,030 1,026,748 77,282

2022 1,104,030 1,004,667 99,363

2023 1,104,030 982,588 121,442

In addition, products of the competitor are predicted to focus their innovation

on processed formulation of beverages. It has also been observed that the different

brands are starting to create innovative processed formulation of beverages to

cater the demand and the changing preference of the consumers.

42
 PROJECTED MARKET SHARE

Every business wants to increase sales and grow market share. In order to

be successful, it requires the ability to determine the company’s current business,

quantify the remaining business and then adopt strategic planning for the

betterment in increasing the sales. Market share projection makes this possible. In

this matter, a percentage is projected on the highest probability that the proposed

product will be purchased in the market. Table shows the information regarding

this matter.

Table 15

Projected Market Share in the Next Five Years

Year Projected Projected Demand- Production Market Projected

Demand Supply Supply Capacity Share Market
Gap (In units) Share
Analysis (whichever
is lower of
(Table 11) (Table 12) (Table 13) (Table 2) demand-
supply gap)
2018 1,104,030 1,070,909 33,121 9,639 9,639 0.87%
2019 1,104,030 1,048,829 55,201 10,121 10,121 0.92%
2020 1,104,030 1,026,748 77,282 10,627 10,627 0.96%
2021 1,104,030 1,004,667 99,363 11,158 11,158 1.01%
2022 1,104,030 982,588 121,442 11,716 11,716 1.06%

Formula:
Projected Market Share (%) = DSG or PC (whichever is lower)
Projected Demand X 100
Table shows the projected market share where demand-supply gap or

production capacity whichever is lower is divided by the projected demand. It

gradually increases at 0.04% every year.

43
 MARKETING STRATEGY

Marketing strategy is the cautiously planned way of introducing and

advertising the product to its market in order to boost sales and profit. This is a

very important step in the introduction of the product because this will give the first

impressions to the consumers. A wrong move on this part could have a great

impact to the product.

Consumers are much more attracted when they see stuffs like

advertisements, brochures, posters and samples rather than just by vocally

introducing it to them.

The researchers decided to use more frequently the physical or visual types

of advertisement since it is more effective in introducing the product to the target

market and to other people as well.

3.1 Promotion

As a start-up business, Miracle Smoothie has its goal in terms of promotion:

to be branded in the market, make the product trend, and maximize profit easily.

These can be achieved through creating promotional strategy and taking steps and

efforts to be known in public. The promotional tools that the business will be using

will include free sample, print media advertising and online marketing.

Free Samples

For Miracle Smoothie, it is a wise move to let the future consumers have a

little taste of the product enough for them to decide whether to patronize the

product or not. An employee will be walking around the vicinity of the stall and the

44
Cebu City Sports Center to let the future consumers taste the product which could

help generate higher demand for the product.

Print Media

Print Media Advertising is a form of advertising that uses physically printed

media to reach consumers, business customers and prospects. In this business,

the project will use posters that will help for the unlimited exposure of the product.

Also, print ads are less intrusive than other forms of media in which prospects have

greater control as to when the prospect views the ads, which eliminates

interruptions. Written in the poster are the information about the business such as

email address and contact numbers. This will be place around the area of the store

and may also be posted on different places that are still accessible and convenient

for the consumers of the product.

Figure 39

Miracle Smoothie Poster

45
 Figure 40

Miracle Smoothie Print Ad

Social Media
The researchers considered this as the biggest scope among all other

promotion mix tools. As marketers, the social networking sites such as Facebook,

twitter, and Instagram will be used to promote our products. This medium is

advantageous to the business because it is free and people have easy access to

it. It will help provide higher product boost by creating accounts with these sites

and sharing information regarding the offering. This will keep the public updated

with the newest features of the product. Also answering to the different comments

and feedbacks to the customers is also the concern. This is to gain trust and

confidence to the customers that the business really responds to them.

46
 Figure 41

Facebook Page

Figure 42

Twitter Page

47
 Figure 43

Instagram Account

3.2 Packaging

Miracle Smoothie is available in 12oz plastic cup with the logo of the product

in front, its nutritional facts on its back, and a plastic straw for the consumer to take

a sip of the smoothie. The plastic cup is made of light-weight plastic material

because paper cups may not be enough to store low temperature drinks.

48
 Figure 44

Packaging of the product – Front

3.3 Term of Sale

It is the term of payment and delivery agreed between the buyer and seller.

This involves the payment, incentives, discounts, return/s and etc. This is also a

great way to create deals with the consumers for them to have a reason to keep

coming back. For this study, the researchers decided to give the incentive by giving

a loyalty card for each individual customer. And its deal is that, on the 7th purchase

of the consumer, 1 cup is equal to 1 purchase, they will receive a free 1 12oz cup

of Calabash Smoothie. The loyalty card will have no expiration date, and will exist

as long as the business will continue to exist. If a customer has fully utilized the

loyalty card or if the card is lost, they will be given a new card.

49
 Figure 45

Loyalty Card

3.4 Channel of Distribution

It is necessary in every business activity to plan the distribution of the

entity’s product. This also refers to the path through which goods or services travel

to get from the place of production to its end users.

Considering the fact that the Miracle Smoothie is just a new entrant in the

business industry, the entity provides business-to-consumer distribution. It is done

by conducting it directly between a company and consumers who are the end

users of the product. Miracle Smoothie will distribute its product through direct

channels or zero level channels. In this manner, the entity will sell its product

without involving any middlemen.

50
 Figure 46

Channel of Distribution

Producer Customer

Brick and Mortar

Miracle Smoothie will be having its physical store in Barangay Sambag 1

Jones Avenue, Cebu City. This is to provide a direct touch between the consumer

and the brand. Through this, the customers can undertake physical interaction with

the sales staffs. Physical stores would be appropriate and would give convenience

to the customer in a timely manner.

3.5 Pricing Policy

Price is one major factor that could affect the customer’s decision to buy a

product. A price cannot be set too low, because a business may experience loss,

or too high, because it is no longer affordable to the customer’s budget. With this,

the researchers created a pricing policy in order to regulate the price of the product

in accordance to both the business and the customer’s advantage. Pricing policy

is important for it provides for the terms to be followed in calculating the cost of the

product with its corresponding limitations.

The total cost of the product is calculated first before setting the price of the

product. And then researchers decided to set it at a reasonable price of P59.00.

51
The pricing strategy used for this proposed project is Psychological Pricing

specifically Charm Pricing. Based on the theory, certain prices have a

bigger psychological impact on consumers than others. Charm pricing strategy

involves using pricing that ends in “9” and “99”. According to Thomas and Mortiz,

“Nine-ending prices will be perceived to be smaller than a price one cent higher if

the left-most digit changes to a lower level, but not if the left-most digit remains

unchanged.” Noting that there are established brands with larger market share,

charm pricing will help the business acquire and get hold of the market share. The

following illustration show the computation of the cost of the product for the five (5)

year period.

Full Costing:

Total Cost = Direct Materials + Direct Labor + Factory Overhead + Other

Percentage Tax + Excise

Table 16

Full Costing

(In Pesos)

Particulars Amounts Total

Direct Materials:
Calabash 6.47
Pineapple 1.96
Brown Sugar 1.72
Low-Fat Milk 5.66
Crushed Ice 1.62 17.43
Direct Labor 11.49
Factory Overhead 3.72
*Excise Tax 2.13
**Other Percentage Tax 1.77
Total Unit Cost 36.54
52
*Solution: P59.00 x 3% = P1.77 (Price is to be constant for the next five (5)

years).

**Solution: P6 per liter x 0.354882 liters (12oz cup) = P2.13

53
 CHAPTER IV

MANAGEMENT ASPECT

Every business needs people to pursue and makes the vision and mission

of the business a reality. But sometimes employees need some higher-ranking

personnel to watch over them to keep up with the expected productivity.

Management is the group of people who plan, controls and strategize the

business’s objectives to make them clear and attainable.

MANAGEMENT DURING THE PRE-OPERATING PERIOD

The pre-operating period is before the actual operations of the proposed

project. It is essential because it is the first step of the actualization of the business.

In this period, general planning is done, the location and suppliers are identified,

necessary permits and licenses are secured, and employees are recruited.

Project Timetable

A Gantt chart is presented to help visualize how long the process is going

to take and plan the order of each task. It will aid the organization in tracking the

progress of each business activity that needs to undertake to initiate the proposed

project the soonest possible time.

A Gantt Chart is a timetable wherein the pre-operating activities are being

plotted in sequence and its expected date and time frame of occurrence. In figure

17, the pre-operating period is to last for five months. The promotions, initial

production, and product testing, and Normal Operation are to take place

simultaneously

54
 Figure 47

Gantt Chart

Month 1 2 3 4 5
Activities
Week 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
1. General Project
Planning
2. Sourcing of Funds
3. Lease Negotiation
4. Securing Permits
and Licenses
5. Leasehold
Improvement
6. Canvassing and
Purchasing of Raw
Materials
7. Canvassing and
Purchasing of Tools
and Equipment
8. Setting up of
Acquired Tools,
Equipment,
Furnitures, and
Fixtures
9. Recruitment,
Selection, and Hiring
of Employees
10. Training of
Employees
11. Promotions, Initial
Production, and
Product Testing
12. Normal Operation

General Project Planning

Success starts with proper planning. The entity must plan and prepare the

possible events that they will encounter as they face throughout the journey. It is

in this phase that the management creates comprehensive plans and thorough

studies as a guide to the success of the project. It is at this stage that cautious

55
decisions should be made, questioned and answered. All the essential matters

regarding the operations of the business are being addressed.

Sourcing of Funds

Funds serve as the fuel in running the business. It is important that the entity

is financially capable of sustaining its capital in managing the business. Since it is

a sole proprietorship, the business will raise its capital from the contribution of the

proprietor himself, through bank loans and well-off individuals. The funds will

initiate the beginning of business operations for its continuity.

Lease Negotiation

Since the business is just starting its operations, it is essential to use a

small-scale location first to minimize the costs to be incurred all throughout the

operating period. The proposed business site will be located at Jones Avenue

Brgy. Samabag 1, Cebu City. The owner or the lessee must establish a legal

negotiation with the lessor concerning the rental fees, modes of payment, the

length of stay, leasehold improvements, penalties, and other matters that are to be

specified or demanded as part of the agreement for the lease of space.

Securing of Permits and Licenses

The government requires the completion of all the necessary documents in

forming a business which includes the acquisition of permits and licenses from the

bureaus and agencies of the government of the Philippines. It is in this phase that

contracts between other private parties are being executed and signed. It takes a

long period before all the necessary statutory requirements are to be completed

due to the period the agencies respond.

56
Lease Improvement

The implementation of lease improvement commences after securing all the

necessary documents for the business. After the lease negotiation, various

renovations shall be needed for the enhancement of the business site. Itincludes

proper ventilation and wirings for the prevention of accidents, the plumbing of

waterways and disposal drainage and expanding the building in case the demand

for the proposed product increases.

Canvassing and Purchasing of Raw Materials

The raw materials used for the production manifest the quality of how the

product will be made. It is trivial for the proprietor to look for accessible suppliers

to provide the raw materials that are needed in the long run of the business.

Through these potential business suppliers, the proprietor must give importance

to costs and benefits analysis to conclude for the best decision to be made.

Canvassing and Purchasing of Tools and Equipment

In purchasing tools and equipment, quality should not be for granted. The

proprietor should assess carefully what the business needs to minimize costs that

are not relevant to the production. It will be a challenge on the part of the proprietor

to purchase tools and equipment needed that are of standard and durable so it

could be kept in the long run. The warranty and maintenance shall be given

importance to control the equipment’s serviceable years.

Setting up of Acquired Tools, Equipment, Furnitures, and Fixtures

All tools, equipments, furnitures, and fixtures will be in their proper

designated location. In doing so, a quick set-up would be established, interruption

57
during operations will be avoided, and there would be ease in the flow of the

operations. The set-up of the tools, equipments, furnitures, and fixtures would be

in line with the floor plan created.

Recruitment, Selection, and Hiring of Employees

In any business, the employees are one of the most important and valuable

assets. Without them there, the business would not operate efficiently and

successfully. Each person brings something unique to the business, and it’s

important to seek out those with the best qualities. The proposed project will need

two beverage servers and one delivery man.

Training of Employees

Training presents a prime opportunity to expand the knowledge base of

the employees. It is very vital since it will show employees how to perform their

jobs safely and efficiently. A trained employee knows what they need to do

during operations and therefore, saves time. Training of employees includes

orientation, basic skills training, customer service training, and training to do the

job itself.

Promotions, Initial Production, and Product Testing

This stage involves the initial production and introduction of the proposed

product to the public. The advertisement styles and forms to be used for the

promotion of the product are further discussed in the previous chapter under

Marketing Strategy.

58
Normal Operation

After the completion of all pre-operating stages, the proposed business

can now operate on its ordinary day to day functions.

MANAGEMENT DURING THE OPERATING PERIOD

The company has its own goals; it needs a detailed management plan to

attain this goal. It must be properly planned to have the best strategy for the

company to improve and achieve their goal.

Forms of business organization

It is important to know the form of the business because of its influence to

the owner’s legal liability and tax treatment. This is essential for the owner upon

considering this type of organization.

The researchers decided to recommend sole proprietorship as a form of

business because it is easy for a start-up business. Aside from being easy to start,

it requires a very low cost in organizing this type of business. Aside from all these

considerations, its taxing power will be declared on the owner’s individual income

tax. It is also subjected to a fewer regulations.

Organizational Structure

The organizational structure shows the hierarchy of positions, and what

their roles are in the business. Also, this determines how each role and

responsibilities are assigned, controlled and supervised by the different levels of

management. Figure 4.0 shows the organizational structure for the proposed

project.

59
 Figure 48

Organizational Chart

Owner

Bookkeeper

Bartender

JOB TITLES AND DESCRIPTION

Task segregation is an essential part of managing a business for generating

a job quality. It will identify the scope of responsibility each employee would be

performing and giving the authority to do so. Thus, the employees will start meeting

their duties and responsibilities as what the management expects.

Here are the following job titles and descriptions of the workers that would

take part on the actual process of the business:

60
Owner

• Leads the business to success;

• The owner will make the juice every Sunday.

• Has overall responsibility for creating, planning, implementing and

integrating the strategic direction of an organization;

• Responsible for the business’ transactions, budgets and, finances;

• Makes and keeps financial statements or bookkeeping;

• Responsible for developing, implementing and executing strategic

marketing plans for an entire organization (or lines of business and

brands within an organization) in order to attract potential customers and

retain existing ones;

• Makes sure an organization is running as well as it possibly can, with a

smooth efficient service that meets the expectations and needs of

customers and clients; and

• Purchase and raw materials necessary for the business, Cooks the

Calabash and turns it into juice and delivers them to the business stall.

• Duties include completing reports, prioritizing projects, completing the

activities log and making sure that personnel are knowledgeable and

qualified about the task given, creating changes to their management in

order to facilitate their work processes and checking everyday functions

of the company.

Bookkeeper

• Records the financial transactions in the accounting system;

61
 • Prepares financial documents (e.g. Purchase Orders, Sales Invoice,

etc.);

• Prepares financial statements and reports quarterly by collecting,

analyzing, and summarizing account information trends;

• Maintains historical records by filing documents; and

• Keeping and maintaining the balance in the books of accounts.

Bartender

• Provide customer service;

• Take orders;

• Receive, keep, and manage cash in every transaction

• Serve beverages; and

• Prepares report on adjustments to inventories of the damaged stocks

and performs inventory count on a monthly basis.

JOB SPECIFICATIONS

All business organizations engage in personnel selection for the success of

an entity. This will be attained by screening out the applicants who can perform the

job. Since the success will be obtained through the collective efforts of the workers.

Business organizations should set job standards in hiring qualified and suitable

individuals that could meet the standard requirements the business organization is

needs. Job specifications may include specific skills, types and amounts of work

experience, personal qualities, educational credentials, professional certifications,

62
or areas of knowledge. The following are the job specifications for one to be

qualified in the listed job positions:

Bookkeeper

• Bachelor's degree;

• Degree Field: Finance, accounting, business or a comparable

discipline;

• More than 3 years’ experience in finance is often required; and

• Key Skills: Analytical, detail-oriented, organizational, strong

communication skills, and excellent math skills.

Bartender

• Providing excellent customer service;

• Possesses a pleasing personality;

• With at least 2 years’ experience in handling and managing cash

• Having some sales ability;

• Knowledge of health and safety regulations is required;

• A good memory to help remember multiple of orders;

• Must have approved health card;

• A good stamina and ability to work for long hours while serving

customers;

• Being a team player is essential; and

• Must have proper hygiene.

63
 WORKING SCHEDULE

A working schedule consists of the working hours to be rendered by the

employee during working days. It also consists the time schedule of which the

employees are required to attend.

The employee of the stall will be working 6 times a week from Monday to

Saturday with a worker with working hours of 5 hours per day during Monday to

Wednesday and 8 hours per day during Thursday to Saturday.

. The stall will be open from 2:00 in the afternoon until 7:00 in the evening

during Monday to Wednesday and 11:00 in the morning until 7:00 in the evening

during Thursday to Saturday. The production of the calabash juice is done by the

owner during Sunday and will be delivered the following day and is expected to

arrive at 11:00AM at the location of the stall.

Table 16

Schedule of Work

Schedule
Personnel
Sun Mon Tue Wed Thurs Fri Sat
Juice
Owner 10:30AM - 7:00PM
making
Bartender Day-off 2:00PM - 7:00PM
Bookkeeper Every last day of the month

RECRUITMENT PROGRAM

Recruitment is the process of identifying what the business needs to employ

in a certain position. The recruitment process includes analyzing job requirements,

searching for potential employees in a particular job, screening and selecting

applicants, hiring and assimilating the new employee to the business. With this,
64
proper deliberation is needed to ensure success in choosing the qualified people

for that job.

The recruitment process is a task in which decisions relies upon the

proprietor’s interest. Thus, the success of the operation of the business relies on

how carefully the proprietor choose his or her employees. For this proposed

business, to hire potential employees, job opening notices will be posted near the

business site. The management will also make use of the popularity of social

media sites and recruiting sites to advertise the vacant position. The following

requirements are to be submitted by the applicants personally:

• Resumé;

• Police or Barangay clearance; and

• Health certificate.

After such, the applicants will undergo an initial interview with the proprietor

to ask certain questions and grasp information straight from the applicant. After

final selection, chosen applicants have to be oriented of the policies of the

business, its benefits and their specific jobs.

COMPENSATION

Employees are essential people that could affect the business’ success.

They receive compensation in exchange of the services they have rendered.

Compensation is something that the employees receive, usually in terms of

money/salaries. An employee’s salary differs from one another because it is

dependent on the role or position that employee is holding or their experience

65
inside the business. The table below shows the compensation for each employee

of the business:

Table 17

Compensation Table

No. of Position Monthly Annual

Employees Salary Salary
1 Bookkeeper 3,000 36,000
1 Bartender 6,500 78,000

Employee Benefits

Incentives are one of the reasons why employees work hard, at the same

time these are also the reason why employees maintain their productivity. Without

these incentives, the employees will not likely be determined to work hard and

maintain high productivity. These incentives can be monetary rewards or non-

monetary rewards, as discussed in the following paragraphs.

Social Security System (SSS) Contribution

This program is mandated by the government to all workers. This program

will provide protection and aid against disasters like disabilities, sickness, death,

maternity benefit and retirement benefits. Workers are highly encouraged to

become a member of the government agency, even private business are required

to enforce this program to their employees, and once they become members they

are expected to contribute monthly a certain amount of money.

Philippine Health Insurance Corporation (PhilHealth) Contribution

The Philippine Health Insurance Corporation (PhilHealth) was established

to give health insurance to workers. It provides hospitalization benefits for their

66
beneficiaries. Likewise, this program will also help those not so fortunate to be able

to afford medical treatment.

PAG-IBIG Home Development and Mutual Fund Contribution

The PAG-IBIG fund was established to aid workers to be able to acquire the

house of their dreams through a savings method design by the former. Every

employer is required and obliged to register and contribute for their employees.

The agency offers its members short-term loans or access to housing programs.

13th Month Pay

All workers are given the benefit of 13th month pay, provided that the former

has worked for the business for at least one month of a calendar year but not later

than December 24 of every year. Its amount is computed 1/12 of the total salaries

earned during the year.

Paid Leaves

There are times when a worker cannot report for work because of different

reasons. And some of these reasons are inevitable causing the worker to leave

work and rest or take care of sick family members. There are different kinds of paid

leaves: Sick leave, Vacation leave, Service Incentive leave (Force leave),

Maternity leave, Paternity leave, Rehabilitation leave and Study leave.

Free Coffee

Coffee is available at the stall for workers who wish to warm themselves up

or keep them awake for the duration of the duty hours. This is for them to keep up

and maintain productivity during their duty.

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 MANAGEMENT POLICIES

Management policies are the guidelines developed by an organization to

govern its actions. When they are followed, workplace accidents and incidents are

less likely to occur making the employees feel safe and comfortable in the

workplace. Also, it provides a roadmap for day-to-day operations and time and

resources will be used efficiently.

Policies are good for employees, and the organization as a whole but these

cannot serve its purpose if it is not correctly communicated to the employees.

These policies will be communicated by posting a company policy inside the

business stall. The employees are required to sign an acknowledgment contract

when they are accepted after the recruitment stage. By doing so, they are

conveying that they have read and understood the policies written in the company

policy.

The following are the policies that every employee must follow:

Attendance and Punctuality

This policy sets rules and guidelines surrounding employee adherence to

work schedules. An employee’s attendance includes sticking to work schedules,

being ready to start work on time, remaining on the job during the workday to

complete duties and limited use of leave.

In case of late arrival due to personal or emergency reasons, employees

should notify the manager. Prior notice of absence which may occur because of

sickness or emergencies is a must. Also, employees are only allowed ten days

sick leave and fifteen days vacation in a year. In the event of a pre-planned leave,

68
employees should ask for the manager’s consent and approval and if not given,

the employee is “absent without official leave.”

Substance Use Policy

During working hours and at all times while on work premises employees

must be free from the influence of drugs, alcohol and tobacco products. This type

of behavior constitutes misconduct and results to employee’s failure in achieving

the required work performance standards. Disciplinary action is made if an

employee violates this policy. Dismissal may result if employee repetitively

violates this policy.

Observance of Proper Dress Code

Dress codes help maintain a professional image in front of customers. It

creates an attractive business image. Society tends to judge people by how they

dress. By observing a proper dress code, a professional business image that

attracts and helps retain customers is established. Dress codes include wearing of

clean aprons and gloves that help in minimizing contamination, putting on of hair

restraints like hair nets to avoid having hair in the product, and lastly, no wearing

of jewelries aside from rings or stud earrings because it may fall into the product.

Confidentiality Policy

In this policy, the expectations are explained on how employees treat

confidential information. Employees are not allowed to use confidential information

for any personal benefit or profit, disclose confidential information to anyone

outside the business and replicate restricted documents. When employees stop

working, they are obliged to return any undisclosed files if there is any and delete

69
them from their devices. In case of violation, disciplinary and, possibly, legal action

is made. This policy is binding even after the separation of employment in cases

of any leaks.

Workplace Romance

Employees who engage in personal relationships may interfere with the

work performance of either individual or with the functioning of the workplace.

Inappropriate displays of affection and sexual harassment ultimately result in

conflict or difficulties in the workplace. Workplace romance is strictly prohibited for

it may raise concerns about favoritism, bias, ethics, and conflict of interest. Advice

and counsel is sought if romantic relationship is discovered in the workplace.

Employee/s may face suspension or termination in case counsel is neglected.

Violations and Sanctions

Every violation committed has corresponding penalties and consequences.

Its purpose is to show employees that the company does not tolerate any

misconduct. The goal of disciplinary policy and procedure is to set and maintain

standards of conduct within the entity.

In the case of the implementation of disciplinary measures of serious

violations, the manager is expected to hold a confidential discussion with the

employee/s involved so that they will understand them. Before any decision to take

any disciplinary action, the employee is told of the nature of the complaint and an

investigation will be undertaken which takes into account any statements from

witnesses. The employee/s may choose to be accompanied by someone of their

choice, and there should be a right to appeal.

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The table on the next page shows the specific violations and sanctions that the

management shall implement among the employees

Table 18

Table of specific violations and sanctions

Violation 1st Offense 2nd Offense 3rd Offense 4th Offense

Accumulating Verbal Written 5-7 days Expulsion

absences warning warning suspension
Absence Verbal Written Termination
without notice warning warning
Tardiness Verbal Written 2-3 days 1-week
warning warning suspension suspension
Sleeping during Warning Warning 1-week Termination
working hours suspension
Using
cellphone Warning Warning 2 weeks Termination
during working suspension
hours without
any emergency
Exhibiting 1-week Expulsion
immoral actions suspension
(i.e. stealing)

Smoking and Verbal Written Expulsion

drinking during warning warning
work hours
Possession and Expulsion
use of
prohibited
drugs
Divulging Expulsion
confidential
information

71
Inappropriate Verbal Written 2-3 days 1-week
dress code warning warning suspension suspension
Romantic Verbal Expulsion
relationship warning
between co-
workers
Imprudent Verbal 2-3 days 1-week Expulsion
behavior warning suspension suspension
towards
customers
Stealing Termination
company’s
property or
money

72
 CHAPTER V

LEGAL AND TAXATION ASPECTS

When it comes to starting a business, obtaining of certain licenses and

permits is necessary in order for the business to operate legally. Licenses and

permits are mandatory for the purpose of identifying the business and making sure

that it is accountable for whatever actions and for keeping track of the business’

finances for tax purposes. Business permits regulate safety, structure and

appearance of the business community. They act as proof that your business

follows certain laws and ordinances. No matter how small or big a business is, they

should comply with whatever the law requires.

LEGAL ASPECT

When a business fails to comply with all the licenses, permits, and tax

registrations it may not be protected legally and expensive penalties may be

incurred, which can jeopardize the business. Seizure of property and assets is also

a possibility, especially when it comes to violations of permits such as health,

sanitation, and fire safety requirements. Compliance is simply conforming to a rule.

Businesses that comply with the rules and regulations within the jurisdiction of the

law will avoid the said consequences. A business which is formed contrary to the

law is considered as illegal in substance.

The ways of obtaining and compliance of legal requirements is

elaborated in this portion. The following are the legal requirements needed by the

proposed project:

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 • Registration of Business Name

• Securing Permits and Licenses

• Application for Social Security System Membership

• Application for Philippine Health Insurance Membership

• Application for the Membership to HDMF

• Registration with the Bureau of Internal Revenue

• Registration with the Bureau of Food and Drugs (BFAD)

Registration of Business Name

The following are the requirements for the registration of its name for Filipino

investors under DTI:

1. Applicants must be Filipino;

2. citizens, at least eighteen (18) years of age;

3. (a) Filipinos whose names are suggestive of alien nationality

must submit proof of citizenship, such as birth certificates, PRC

ID, voter’s ID, and passport;

(b) If the applicant has foreign surrounding name, acquired

Filipino citizenship by naturalization, election or other means

provided by law, he must submit proof of his Filipino citizenship

such as:

• Naturalization Certificate and Oath of Allegiance;

• Valid ID card issued by the Integrated Bar of the

Philippines (IBP) or Professional Regulatory Commission

(PRC); and

74
 3. Processing fee of five hundred (500) pesos with fifteen (15) pesos

for the Documentary Stamp.

The following procedures are to be followed and successfully registered

under DTI:

1. The registrant may check online if the preferred business name

is still available at the DTI Website (http://www.dti.gov.ph/)

2. The application form must be filled out (copies can be acquired

from DTI-Field Offices and is also available online) with at least

three desired business names indicated

3. Submit the completed application form jointly with the

documentary requirements, and pay the required fees to

appropriate DTI-Field Offices accordingly. The location of DTI

Cebu Regional Office is in Osmeña Boulevard corner Burgos

Street, Cebu City.

4. After the evaluation of the said application form and documents,

the applicant will be informed personally for those walk-in

applicants or through an auto e-mail notification for those who

registered online.

5. Finally, the Certificate of Registration issued, and the business is

successfully registered. The Certificate of Business Name

Registration is valid for five (5) years and shall be valid only at the

business address indicated thereon.

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Securing Permits and Licenses

Business permits and licenses must be secured by businessmen to operate

legally in a locality. It should be registered to the place where it is located and

operated. The following are the legal requirements that it must conform:

Business Permit

Securing a Mayor’s Permit from the Cebu City Hall is one of the

requirements for the business to operate. The application must be done prior to

normal operations. These are the relevant requirements needed for the approval:

✓ DTI Registration

✓ Barangay Clearance

✓ Police Clearance

✓ Sanitary Permit

✓ Fire Safety Inspection Certificate

✓ Community Tax Certificate

DTI Registration

Registering a business name with DTI is the first step to becoming a sole

proprietor as it gives you the sole right to use the business name.

Barangay Clearance

A common requirement in most government and private transaction is a

copy of a Barangay Clearance or Certificate of Residency. This is to certify that the

individual is living or residing in a particular barangay. The proposed business

would be located in Brgy. Sambag 1 Cebu City. Anyone can apply for a certificate

after all the requirements have been complied with, necessary fees to be charged

76
and the approval of the Barangay Captain. This is very important in the

establishment of the business as well as in the application of jobs.

Sanitary Permits

Businesses, specifically in the food and beverage industry, are mandated

to secure a sanitary permit or certificate to conduct routine inspectional activities

to be accomplished by the Cebu City or Municipal Health Office in assuring safe,

wholesome, sanitary food preparation. The requirements for the issuance of the

sanitary permit for establishments are as follows:

✓ Official receipt of payment of the Sanitary fee

✓ Inspection report of the Sanitation Inspector

✓ Schematic diagram or floor plan of the establishment

✓ Occupancy permit of the establishment

Police Clearance

Police Clearance is a certificate to ensure that an individual is cleared and

has not been involved in any criminal act. As part of safety precautions, employers

require this in the process of hiring qualified employees. It can be acquired from

the office of the Philippine National Police in Cebu City. The following are the

requirements for the issuance of the Police Clearance:

✓ Completed application form

✓ Barangay Clearance

✓ Community Tax Certificate or Cedula

✓ Birth Certificate (local) or NSO (Original Copy)

77
 ✓ Official receipt of the corresponding fees from the Municipal’s Treasurer’s

Office

Appropriate dress code and personal appearance of the applicant is

required in the certification to be able to have a photo taken and fingerprints by the

police department. After the submission of the requirements, it will undergo

processing and the clearance will then be released.

Fire Safety Inspection Certificate

Fire Safety Inspection Certificate is a requirement issued by the Bureau of

Fire Protection unit in case of unforeseen events such as fire. This certification was

issued to certify that the establishment has complied the precautionary measures

being asked by the local government unit for the security in case of fire. The

procedures in filing this certificate are as follows:

• Secure FSEC Application Form with the list of requirements from

Customer Relation Officer (CRO).

• Submit duly accomplished application form with the complete

requirements to the CRO.

• Wait for the release of Orders of Payment (OP).

• Pay Fire Code Fees (FCF) to Government Service Bank (GSB)/Local

Treasure/BFP Collecting officer

• Present machine validated OP/OR as a basis for the issuance of claim

stub.

• Present claim stub to CRO

78
Application for Social Security System (SSS) Membership

Application for the Social Security System (SSS) Membership is a

mandatory requirement of the Department of Labor and Employment (DOLE).

Every business institution is required to file for this application to secure the welfare

of the employees or workers. This is a requirement for them to avail retirement and

health benefits. This can also help them in assistance such as educational,

medical, and house loan in case of unforeseen events.

The owner of the sole proprietorship must secure the following requirements

for registration:

• Self-employed data record

• Employee’s data record

• Monthly contribution

• Schedule of contribution

• Quarterly contribution

• Sickness Notification

The following must be filed and submitted:

1. SSS Form R-1 (Employer Registration)

2. R-1A (Employment Record)

3. Form E-1 (Personal Record)

4. Form R-3 (Contribution Payment Return)

Application for Philippine Health Insurance Corporation (PHIC) Membership

PhilHealth is a national health insurance program established to provide

health insurance coverage and ensure affordable, acceptable, available and

79
accessible health care services for all citizens of the Philippines. It is likewise a

tax-exempt government corporation attached to the Department of Health for

policy coordination and guidance.

Private and public entities are required to register with PhilHealth for the

services offered by the corporation by the Philippine Government. A certification

will be given and is one of the requirements for other permits and licenses about

the establishment of the business.

The following are the requirements for Employer Registration in the private sector:

1. Employer Data Record or ER1 (in duplicate). This form is downloadable at

the PhilHealth website.

2. Business permit or license to operate and any of the following additional

documents required for various types of business.

3. Philhealth Membership Registration Form (PMRF) for each employee (in

duplicate)

After having processed the requirements, PhilHealth will issue the following:

1. PhilHealth Employer Number (PEN) and the Certificate of Registration.

2. PhilHealth Identification Number (PIN) and Member Data Record (MDR) of

registered employees.

Lastly, the Certificate of Registration should be displayed in the area of the

office since this is a legal regulation that employers must obey.

Registration with the Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) is an agency under the Department

of Finance. It collects more than half of the total revenue of the government. The

80
proposed business is under the Revenue District No. 82- Cebu City South. BIR is

mandated by law to assess and collect all national internal revenue taxes, fees,

and charges, and to enforce all forfeitures, penalties, and fines connected also,

including the execution of judgements in all cases, decided in its favor by the Court

of Tax Appeals and the ordinary courts. In completing the registration, the following

requirements should comply:

1. BIR Form No. 1901 (Application for Registration) – 2 Copies

2. BIR Form No. 0605 (Payment forms) – 3 copies

3. BIR Form No. 2305 (Certificate of Update and Exemption and Employer’s

and Employee’s Information) – 2 copies

4. Birth Certificate

5. 2x2 picture

6. Marriage Contract (if applicable)

7. NSO Certified Birth Certificate of declared dependents

8. Photocopy of Mayor’s Business Permit (or duly received an application for

Business Permit, if the former is still in the process with LGU) and PTR

issued by the LGU

9. DTI Certificate of Registration of Business Name, if business trade name

should be used

10. Professional Tax Receipt

11. Registration fee of P500.00

In completing the registration, the following steps are to be made:

81
 1. BIR Form 1901 together with the documentary stamp tax requirements of

the Regional District Officer (RDO) is to be submitted.

2. An annual registration fee of P500.00 at the Authorized Agent Banks (AAB)

of the concerned RDO.

3. Pay P15.00 for the Documentary Stamp Tax (DST). And then present the

proof of payment.

4. Present ATP requirements and registration of books of accounts.

5. Attend the tax payer’s initial briefing is to be concluded by the RDO

concerned for new registrants to apprise then if their rights and duties.

6. The Regional District Officer (RDO) shall then issue the Certificate of

Registration (Form 2303) together with the “Ask for receipt” routine,

authorized to Print and Book of Accounts.

Registration with the Bureau of Food and Drugs (BFAD)

This is a special or secondary permit that is required for business

establishments with special operation or industry such as manufacturing and

selling products related to food and drugs. Hence, the proposed business is

required to have this.

According to the FDA flowchart, product registration for processed food is

scheduled every Monday. Here are the stages to obtain the agency’s approval.

1. Proceed to the Public Assistance Information & Compliance Section, and

inquire about the requirements for FDA registration. Get an application form and

prepare the necessary papers.

82
2. Documents will be assessed to determine the amount to be paid for the whole

process. Applicant will be given a routing slip for the different stages of the FDA

registration after payment.

3. At its Product Services Division, the FDA will evaluate the technical documents

and labeling materials of the product.

4. FDA will proceed with the actual evaluation to be conducted by certified food

technologists.

5. If the product meets FDA standards, it would be given a Certificate of Product

Registration (CPR). Otherwise, it would be given a Letter of Denial (LOD) or a

Notice of Deficiency (NOD).

6. The CPR, LOD and NOD are distributed at the Releasing Section of the FDA.

TAXATION ASPECT

Taxation is the process by which the government collects money from

citizens and corporate entities, on the production cost or sales price of goods and

services. Taxes are known to be the lifeblood of the government. Without it, the

government is paralyzed. The most basic function of taxation is to fund government

expenditures.

Taxes detract businesses from gaining profit that is why it is not very popular

amongst them. Businesses, to be successful, must have an effective tax strategy

that takes advantage of legal loopholes and credits presented by the tax code. This

tax policy will help the business reduce its tax liability, thereby increasing its

profitability. Compliance with the tax regulations mandated by the government

83
contributes a lot to the progress of our country, without taxes our government

cannot exist too.

Understanding the tax laws will help a business plan for the future. A long

hard look at the different tax laws that pertain to the different ways that a business

will be registered to should be done because by doing so, an estimate will be made

on how much money will be owed for taxes. Business entities should comply with

the proper tax regulations required by the Bureau of Internal Revenue and other

directly-concerned government agencies. For the purpose of this study, it is

necessary to identify the pertinent taxes for the business.

Percentage Tax

Percentage tax is a business tax that is regulated within the Philippines.

This tax type is usually imposed from individuals or businesses that sells products

and services with annual sales not exceeding Php 3,000,000, and are not VAT-

registered. The proposed business is subject to a 3% percentage tax and is

required to file percentage tax monthly.

Income Tax

An income tax is a tax that governments impose on financial income

generated by individuals or entities within their jurisdiction. By law, businesses and

individuals must file an income tax return every year to determine whether they

owe any taxes or are eligible for a tax refund. Income tax is a key source of funds

that the government uses to fund its activities and serve the public.

84
 Income Tax is a tax on all yearly profits arising from property, profession,

trades or offices or as a tax on a person’s income, emoluments, profits and the

like. The succeeding table presents the graduated rates for income tax.

From To Fixed Rate

0 250,000.00 0 0

250,000.00 400,000.00 0 20%

400,000.00 800,000.00 30,000.00 25%

800,000.00 2,000,000.00 130,000.00 30%

2,000,000.00 8,000,000.00 490,000.00 32%

8,000,000.00 and above 2,410,000.00 35%

Documentary Stamp Tax

Documentary stamp tax is a tax on documents, instruments, loan

agreements and papers evidencing the acceptance, assignment, sale or transfer

of an obligation, right or property incident thereto. It is an excise tax upon the

privilege, opportunity or facility offered at exchanges for the transaction of the

business and is applicable only to transactions affected and consummated within

the Philippines.

Withholding Tax

Withholding tax, also called a retention tax, is a government requirement for

the payer of an item of income to withhold or deduct tax from the payment, and

pay that tax to the government. In most jurisdiction, withholding tax applies to

employment income.

85
 Business and bookkeeping agents
and agencies- If the current year’s
1601-E/2307 WE gross income is Php 720,000 and WI060 8%
below

In this study, the retainer’s fee of the bookkeeper is subject to a 10%

withholding tax.

Excise Tax

Excise Tax is a tax on the production, sale or consumption of a commodity

in a country. This is a tax imposed on alcohol, tobacco, petroleum, mineral

products, miscellaneous articles like automobiles and non-essential goods.

The SSB or Sweetened Beverage Tax seeks to impose an excise tax of ten

pesos (Php 10.00) on sugar sweetened beverages, the rate of which shall be

increased by (4%) every year thereafter.

Excise Tax Return for Sweetened Beverages

This return will be filed in triplicate by the following:

1. Manufacturer or producer of locally manufactured or produced sweetened

beverages; and

2. Owner or person having possession of sweetened beverages which were

removed from the place of production without the payment of excise tax.

For each place of production, a separate return shall be filed and the excise

tax shall be paid before removal of the sweetened beverages from the place of

production.

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 CHAPTER VI

FINANCING ASPECT

Before starting a business, an entity must secure sufficient financial

resources to be able to operate efficiently and successfully. It needs to consider

its financing resources for these are the lifeblood of the business entity. It is in this

aspect that the organization determines the costs necessary to put up the

business, as well as identifies the possible sources of funds needed for the project.

This phase guides the management in making decisions for the project’s cost to

make it more reasonable and cost-effective.

Financing in every business is very indispensable especially when it comes

to seeking possible financial resources that could be employed to carry out the

activities of an industry. It determines and evaluates the project’s capital

requirements, the terms and conditions forecast of operating revenues, costs and

expenses. In this stage, it primarily consists of the estimation of all the cost element

of the proposed project where resources could be fully utilized and applied

efficiently to make the business successful. It gives the owner an estimated

amount needed for initial capital to begin its operations. Thus, through proper

sources of financing and administration of the funds, business becomes more

efficient and effective.

Sources of Financing

Funding is the fuel on which a business runs. Throughout its life, funds are

necessary. Since it is a sole proprietorship, the prospective owner will finance the

87
start-up capital first. His savings are likely to be the source of funds of the early

stage of the business.

ESTIMATED PROJECT COST

Pre-operating Expenses Note Amount Total

Project Feasibility Cost 1 PHP 7,225.00
Permits and Licenses 2 2,635.00 PHP 9,860.00
Property, Plant and
Equipment
Leasehold Improvement 3 PHP 4,050.00
Production Equipment 4 14,422.00
Furniture and Fixtures 5 11,675.00 30,147.00
Working Capital
Production Supplies 6 PHP 2,730.00
Direct Materials 7 14,005.00
Indirect Materials 8 6,400.00
Salaries Expense 9 9,230.00
Rent Expense 10 25,000.00
Utilities Expense 11 4,400.00
Cleaning Expense 12 1,249.00
Advertising Expense 13 8,250.00
Transportation Expense 14 800.00 72,064.00
Total PHP 112,071.00

88
 Note 1

Project Feasibility Cost

Particulars Total Cost

Printing and Photocopying PHP 500.00

Bookbinding 1,000.00

Snacks for Panelists 300.00

Honorarium 3,500.00

Plagiarism and Grammar Test 200.00

Miscellaneous Expense 800.00

Transportation Expenses 300.00

Bond paper 625.00

Total PHP 7,225.00

Note 2

Permits and Licenses

Particulars Total Cost

Barangay Clearance PHP 100.00

Police Clearance 130.00

Mayor’s Business Permit 500.00

Sanitary Permit 100.00

Health Certificate 50.00

Fire Safety Inspection 100.00

DTI Registration 500.00

89
 BIR Registration 500.00

Business Permit Notarization 100.00

Documentary Stamp Tax 305.00

Garbage Collection Fee 250.00

Total PHP 2,635.00

Note 3

Leasehold Improvements

Particulars Quantity Unit Cost Total Cost

Kitchen Sink (Lotus) 1 PHP 2,500.00 PHP 2,500.00

Faucet 1 300.00 300.00

Paint (Boysen White) 2 625.00 1,250.00

Total PHP 4,050.00

Note 4

Production Equipment

Particulars Quantity Unit Cost Total Cost

Blender 2 PHP 3,800.00 PHP 7,600.00

Refrigerator (Hanabishi) 1 4,300.00 4,300.00

Emergency Light (Omni) 1 1,299.00 1,299.00

Gas Stove 1 1,223.00 1,223.00

Total PHP 14,422.00

90
 Note 5

Furniture and Fixtures

Particulars Quantity Unit Cost Total Cost

Working Chairs (Cofta) 3 PHP 425.00 PHP 1,275.00

Working Table (Germany) 1 1,500.00 1,500.00

Industrial Fan 1 3,000.00 3,000.00

Fire Extinguisher 1 4,400.00 4,400.00

Cabinet 1 1,500.00 1,500.00

Total PHP 11,675.00

Note 6

Production Supplies

Particulars Quantity Unit Cost Total Cost

Apron 2pcs. PHP 25.00 PHP 50.00

Hairnet 1pack 12.00 12.00

Measuring Cup 2pcs. 79.00 158.00

Ladle 3pcs. 50.00 150.00

Strainer 1pc. 50.00 50.00

Kitchen Towel 2pcs. 50.00 100.00

Knife 3pcs. 100.00 300.00

Gloves 2dozen 125.00 250.00

Chopping Board 1pc. 150.00 150.00

Microwave Container 5pcs. 28.00 140.00

91
Straw Holder 1pc 200.00 200.00

Bowl 2pcs. 85.00 170.00

Cooler 1pc 300.00 300.00

Funnel 5pcs. 50.00 250.00

Serving Spoon 3pcs 150.00 450.00

Total PHP 2,730.00

Note 7

Direct Materials

Particulars 1-month Unit Cost Total Cost

Quantity

Pineapple 35 PHP 45.00 PHP 1,575.00

Low-Fat Milk 65 70.00 4,550.00

Crushed Ice 26 50.00 1,300.00

Brown Sugar 30 46.00 1,380.00

Calabash Fruit 26 200.00 5,200.00

Total PHP 14,005.00

Note 8

Indirect Materials

Particulars 1-month Unit Cost Total Cost

Quantity

Plastic Cup 1,800 PHP 3.00 PHP 5,400.00

92
 Straw 1,800 0.50 900.00

Bottle 10 10.00 100.00

Total PHP 6,400.00

Note 9

Salaries Expense

Particulars No. of No. of Rate Total Amount

Employees Days

Bartender 1 26 PHP 355.00 PHP 9,230.00

Total PHP 9,230.00

Note 10

Rent Expense

Particulars Total Cost

Security Deposit PHP 5,000.00

3 Months advance 15,000.00

Monthly 5,000.00

Total 25,000.00

93
 Note 11

Utilities Expense

Particulars Total Cost

Electricity PHP 3,500.00

Water 900.00

Total PHP 4,400.00

Note 12

Cleaning Supplies

Particulars Quantity Unit Cost Total Cost

Broom 2pcs. PHP 20.00 PHP 40.00

Dustpan 2pcs. 45.00 90.00

Garbage Can 2pcs. 175.00 350.00

Trash Bags 24pcs. 15.00 360.00

Mop 1pc. 169.00 169.00

Sanitary Mask 2pcs. 50.00 100.00

Cleaning Detergent 1kilo 60.00 60.00

Floor Rag 2pcs. 40.00 80.00

Total PHP 1,249.00

94
 Note 13

Advertising Expense

Particulars Quantity Unit Cost Total Cost

Tarpaulin (4’x8’) 32sq.m PHP 12 PHP 384.00

Pamphlets 500 1.8 900.00

Free Sample 200 32.33 6,466.00

Loyalty Card 500 1.0 500.00

Total PHP 8,250.00

Note 14

Transportation Expense

Particulars Total Cost

Transportation Expense PHP 800.00

Total PHP 800.00

95
 CHAPTER VII

FINANCIAL ASPECT

GENERAL ASSUMPTIONS

The following are the general assumptions used in the preparation of the financial

statements:

Operations

1. The business will adopt a calendar year period.

2. The business will start its pre-operating period from September 1, 2017 up

to December 31, 2017.

3. The normal operating period will start on January 1, 2018.

4. The initial capital will be Php 112,071.00

5. The business will be operating from Monday to Wednesday at 2:00PM to

7:00PM and Thursday to Saturday at 11:00AM to 7:00PM

6. There is 270-day operation every calendar year.

7. Rent expense will be paid every end of the month.

8. The business shall make the SSS, Pag-ibig and Philhealth contributions on

their respective prescribed schedules. Contributions for the last month shall

accrue at the end of every year.

Production

1. The annual production capacity will increase 5% annually

96
Salaries

1. The employees will be given 13th month on or before December 24 of each

year. Such pay shall be equal to their annual salary divided by twelve.

2. There will be no additional employees, unless there are vacancies.

3. The increase of the employee’s salary will be 2% and will start at the second

year of the employee in the business.

4. The stall workers will be paid every 15th and 30th of the month.

Sales

1. The selling price of the product will remain the same for the first five years

of the business

2. Unit sold is equivalent to full production capacity.

3. Premium for the redemption of the free smoothie is estimated at 200 units

every year.

Tools and Equipments

1. All tools and equipments will be purchased using cash.

2. All tools and equipments shall have no salvage value at the end for their

useful life.

3. All tools and equipments will be purchased at the beginning of each

accounting period and are expected to last until their expected useful life.

Depreciation

97
 1. The useful life of the depreciable assets without salvage value are as

follows:

• Blender 1 year

• Refrigerator 5 years

• Leasehold Improvement 5 years

• Working Chairs 5 years

• Working Table 5 years

• Industrial Fan 5 years

• Cabinet 5 years

• Fire Extinguisher 5 years

The straight-line method of depreciation will be used.

Inventory

1. There will be no finished goods inventory since the finished product is

immediately consumed.

2. The purchase of crushed ice will increase according to the annual capacity

of the business.

3. The projected ending inventory of raw materials is 5% of the total purchased

raw materials inventory for the year.

4. Inventory will be replenished every first operating day of the week.

5. Price of every raw materials will increase by 2% every two years.

Utilities

1. Electricity and Water will increase by 3% every 3 years.

98
Cleaning Supplies

1. Cleaning supplies shall be purchased on cash.

2. Cleaning supplies expense shall be expense as incurred.

3. Purchase of cleaning supplies is during every beginning of the month.

Production Supplies

1. Production supplies shall be purchased on cash

Leasehold Improvement

1. Leasehold improvement shall be made before the start of the operation and

will continue for minor improvements.

2. All leasehold improvements shall be incurred through cash.

3. The usual life of the leasehold improvement shall be five years.

Rent

1. The lease term agreement provides that the lease term shall be 5 years and

renewable for another 5 years. Documentary Stamp Tax shall be imposed

in the lease contract.

2. Rent Shall be paid at the beginning of the month.

3. There shall be a security deposit equivalent to 1 month and is refundable at

the end of the lease term if the leasee no longer occupies the premises.

4. There shall be an advance payment of 3 months at the beginning of the

lease. And a security deposit equivalent to the rent.

Permits and Licenses

1. These documents shall be paid in cash.

99
Allowance for Wastage

1. Allocation for the said allowance is estimated to be at 5% of the total

inventory for the year.

2. Pineapple and Low-Fat Milk are the ingredients that are likely to be spoiled.

Allocation of Expenses

The following expenses are to be allocated as follows:

Particulars Production Selling Administrative

Production Supplies 100%

Direct Materials 100%

Indirect Material 100%

Direct Labor 100%

Rent Expense 100%

Electricity 50% 50%

Water 50% 50%

Cleaning Supplies 100%

Advertising Expense 100%

Repairs and Maintenance 100%

Sampling Expense 100%

Permits and Licenses 100%

Production Supplies 100%

Advertising Expense 100%

Repairs and Maintenance 100%

100
 Sampling Expense 100%

Permits and Licenses 100%

Leasehold Improvement 100%

Depreciation Expense 50% 50%

Employee Benefits 100%

Allowance for Wastage 100%

101
 Miracle Smoothie
Statement of Comprehensive Income
For the Years Ended, December 31

Schedule 2019 2020 2021 2022 2023

Sales 2 ₱568,701.00 ₱597,139.00 ₱626,993.00 ₱658,322.00 ₱691,244.00
Less: Cost of Goods Sold 3 330,056.00 339,625.85 347,914.36 349,912.82 357,874.95
Gross Profit (Loss) ₱238,645.00 ₱257,513.15 ₱279,078.64 ₱308,409.18 ₱333,369.05
Less: Operating Expenses 29 217,804.58 208,835.17 210,933.40 212,047.41 214,062.03
Operating Profit (Loss) ₱ 20,840.42 ₱ 48,677.98 ₱ 68,145.24 ₱ 96,361.77 ₱119,307.01
Less: Finance Costs - - - - -
Net Income (Loss) Before Business
₱ 20,840.42 ₱ 48,677.98 ₱ 68,145.24 ₱ 96,361.77 ₱119,307.01
Tax
Less: Income Tax 40 - - - - -
Net Income (Loss) After Business
₱ 20,840.42 ₱ 48,677.98 ₱ 68,145.24 ₱ 96,361.77 ₱119,307.01
Tax

102
 Miracle Smoothie
Statement of Changes in Owner's Equity
For the Years Ended, December 31

Schedule 2019 2020 2021 2022 2023

Owner's Equity, Beginning ₱ 112,071.00 ₱ 112,911.42 ₱ 111,589.40 ₱ 109,734.64 ₱ 106,096.41
Add: Net Income (Loss) After
SCI 20,840.42 48,677.98 68,145.24 96,361.77 119,307.01
Tax
Total ₱ 132,911.42 ₱ 161,589.40 ₱ 179,734.64 ₱ 206,096.41 ₱ 225,403.42
Add: Additional Investments - - - - -
Less: Withdrawals 20,000.00 50,000.00 70,000.00 100,000.00 120,000.00
Owner's Equity, Ending ₱ 112,911.42 ₱ 111,589.40 ₱ 109,734.64 ₱ 106,096.41 ₱ 105,403.42

Miracle Smoothie
Statement of Cash Flows
For the Years Ended, December 31

Schedule 2019 2020 2021 2022 2023

Cash Flows from Operating Activities
Net Income (Loss) SCI ₱ 20,840.42 ₱ 48,677.98 ₱ 68,145.24 ₱ 96,361.77 ₱119,307.01
Depreciation Expense 21 11,405.00 11,405.00 11,405.00 11,405.00 11,405.00
Operating Income before working capital
₱ 32,245.42 ₱ 60,082.98 ₱ 79,550.24 ₱107,766.77 ₱130,712.01
changes
Working Capital Changes:
Increase/Decrease in Raw Materials Inventory 6 (8,403.00) (420.15) (46.34) (6.38) (171.74)
Increase/Decrease in Cleaning Supplies 10 (5,909.00) 350.00 - (350.00) 350.00
Increase/Decrease in Production Supplies 11 (2,730.00) - - - -
103
 Schedule 2019 2020 2021 2022 2023
Increase/Decrease in Accrued Expense 38 12,044.70 1,456.85 (193.37) 478.32 386.27
Total Increase (Decrease) Cash Flows from
₱ 27,248.12 ₱ 61,469.67 ₱ 79,310.53 ₱107,888.71 ₱131,276.54
Operating Activities

Cash Flows from Investing Activities

Payment of Security Deposit 13 (5,000.00) - - - -
Payment of Production Equipment 15 (8,100.00) (3,800.00) (3,800.00) (3,800.00) (3,800.00)
Payment of Leasehold Improvement 16 (22,050.00) - - - -
Payment of Furnitures & Fixtures 17 (11,675.00) - - - -

Total Increase (Decrease) Cash Flows from

₱(46,825.00) ₱(3,800.00) ₱ (3,800.00) ₱ (3,800.00) ₱(3,800.00)
Investing Activities

Cash Flows from Financing Activities

Owner's Investment SCOE 112,071.00 - - - -
Additional Investments SCOE - - - - -
Withdrawals SCOE (20,000.00) (50,000.00) (70,000.00) (100,000.00) (120,000.00)
Total Increase (Decrease) Cash Flows from
₱ 92,071.00 ₱(50,000.00) ₱(70,000.00) ₱(100,000.00) ₱(120,000.00)
Financing Activities
Total Net Increase (Decrease) in Cash 72,494.12 7,669.67 5,510.53 4,088.71 7,476.54
Cash Balance at the beginning of the period - 72,494.12 80,163.80 85,674.33 89,763.04
Cash Balance at the end of the period ₱ 72,494.12 ₱ 80,163.80 ₱ 85,674.33 ₱ 89,763.04 ₱ 97,239.58

104
 Miracle Smoothie
Statement of Financial Position
As of the Years Ended, December 31

Schedule 2019 2020 2021 2022 2023

Assets
Current Assets
Cash SCF ₱ 72,494.12 ₱ 80,163.80 ₱ 85,674.33 ₱ 89,763.04 ₱ 97,239.58
Raw Materials Inventory 6 8,403.00 8,823.15 8,869.49 8,875.87 9,047.61
Cleaning Supplies 10 5,909.00 5,559.00 5,559.00 5,909.00 5,559.00
Production Supplies 11 2,730.00 2,730.00 2,730.00 2,730.00 2,730.00
Total Current Assets ₱ 89,536.12 ₱ 97,275.95 ₱ 102,832.83 ₱ 107,277.92 ₱ 114,576.19
Non-current Assets
Security Deposit 13 ₱ 5,000.00 ₱ 5,000.00 ₱ 5,000.00 ₱ 5,000.00 ₱ 5,000.00
Furnitures & Fixtures, Net 20 9,340.00 7,005.00 4,670.00 2,335.00 -
Production Equipment, Net 20 3,440.00 2,580.00 1,720.00 860.00 -
Leasehold Improvements 20 17,640.00 13,230.00 8,820.00 4,410.00 -
Total Non-Current Assets ₱ 35,420.00 ₱ 27,815.00 ₱ 20,210.00 ₱ 12,605.00 ₱ 5,000.00
Total Assets ₱124,956.12 ₱ 125,090.95 ₱ 123,042.83 ₱ 119,882.92 ₱ 119,576.19

Liabilities and Owner's Equity

Current Liabilities
Accrued Expenses 38 ₱ 12,044.70 ₱ 13,501.55 ₱ 13,308.18 ₱ 13,786.51 ₱ 14,172.77
Total Liabilities ₱ 12,044.70 ₱ 13,501.55 ₱ 13,308.18 ₱ 13,786.51 ₱ 14,172.77
Owner's Equity SCOE 112,911.42 111,589.40 109,734.64 106,096.41 105,403.42

Total Liabilities and Owner's ₱124,956.12 ₱ 125,090.95 ₱ 123,042.83 ₱ 119,882.92 ₱ 119,576.19

Equity
105
 Schedule 1 - Sales Budget in Units

2019 2020 2021 2022 2023

Beginning Inventory 0 0 0 0 0
Add: Units Produced 9,639 10,121 10,627 11,158 11,716
Total Goods Available for Sale 9,639 10,121 10,627 11,158 11,716

Schedule 2 - Net Sales

Schedule 2019 2020 2021 2022 2023

Units Sold 1 9,639 10,121 10,627 11,158 11,716
Multiplied by: Current Year
₱59.00 ₱59.00 ₱59.00 ₱59.00 ₱59.00
Price
Net Sales ₱568,701.00 ₱597,139.00 ₱626,993.00 ₱658,322.00 ₱691,244.00

106
 Schedule 3 - Cost of Goods Sold

Schedule 2019 2020 2021 2022 2023

Direct Materials 4 ₱159,657.00 ₱167,639.85 ₱171,374.86 ₱171,414.82 ₱174,677.88
Direct Labor 7 95,850.00 95,850.00 97,767.00 97,767.00 99,722.34
Manufacturing Overhead 8 70,874.00 72,461.00 75,024.00 76,982.50 79,651.26
Total Manufacturing Overhead ₱326,381.00 ₱335,950.85 ₱344,165.86 ₱346,164.32 ₱354,051.48
Divide by: No. of Units produced 1 9,639 10,121 10,627 11,158 11,716
Unit Cost ₱33.86 ₱33.19 ₱32.39 ₱31.02 ₱30.22
Multiply: No. of Units sold 2 9,639 10,121 10,627 11,158 11,716
Cost of Goods Sold ₱326,381.00 ₱335,950.85 ₱344,165.86 ₱346,164.32 ₱354,051.48

Schedule 4 - Direct Materials

Schedule 2019 2020 2021 2022 2023

Raw Materials, beg. ₱ - ₱8,403.00 ₱8,823.15 ₱8,869.49 ₱8,875.87
Add: Raw Materials
Purchases 5 168,060.00 168,060.00 171,421.20 171,421.20 174,849.62
Total 168,060.00 ₱176,463.00 ₱180,244.35 ₱180,290.69 ₱183,725.50
Less: Raw Materials, End 6 8,403.00 8,823.15 8,869.49 8,875.87 9,047.61
Direct Materials ₱159,657.00 ₱167,639.85 ₱171,374.86 ₱171,414.82 ₱174,677.88

107
 Schedule 5 - Purchases of Raw Materials

Particulars 2019 2020 2021 2022 2023

Calabash Fruit ₱ 62,400.00 ₱ 62,400.00 ₱ 63,648.00 ₱ 63,648.00 ₱ 64,920.96
Pineapple 18,900.00 18,900.00 19,278.00 19,278.00 19,663.56
Brown Sugar 16,560.00 16,560.00 16,891.20 16,891.20 17,229.02
Low-fat Milk 54,600.00 54,600.00 55,692.00 55,692.00 56,805.84
Crushed Ice 15,600.00 15,600.00 15,912.00 15,912.00 16,230.24
Total Purchases of Raw Materials ₱ 168,060.00 ₱ 168,060.00 ₱ 171,421.20 ₱ 171,421.20 ₱ 174,849.62

Schedule 6 - Raw Materials Inventory

Schedule 2019 2020 2021 2022 2023

Annual Inventory-Calabash Fruit, End 6.1 ₱3,120.00 ₱3,276.00 ₱3,346.20 ₱3,349.71 ₱3,413.53
Annual Inventory-Pineapple, End 6.2 945.00 992.25 1,013.51 1,014.58 1,033.91
Annual Inventory-Brown Sugar, End 6.3 828.00 869.40 888.03 888.96 905.90
Annual Inventory-Low-fat Milk, End 6.4 2,730.00 2,866.50 2,785.20 2,785.20 2,840.89
Annual Inventory-Crushed Ice, End 6.5 780.00 819.00 836.55 837.43 853.38
Raw Materials, End ₱8,403.00 ₱8,823.15 ₱8,869.49 ₱8,875.87 ₱9,047.61

108
 Schedule 6.1 - Raw Materials Inventory - Calabash Fruit

2019 2020 2021 2022 2023

Total Annual Purchases 5 ₱ 62,400.00 ₱ 62,400.00 ₱ 63,648.00 ₱ 63,648.00 ₱ 64,920.96
Add: Ending Inventory 0 ₱ 3,120.00 ₱ 3,276.00 ₱ 3,346.20 ₱ 3,349.71
Total Inventory ₱ 62,400.00 ₱ 65,520.00 ₱ 66,924.00 ₱ 66,994.20 ₱ 68,270.67
Multiply by: RM Invty Rate 5% 5% 5% 5% 5%
Raw Materials - Calabash, End ₱ 3,120.00 ₱ 3,276.00 ₱ 3,346.20 ₱ 3,349.71 ₱ 3,413.53

Schedule 6.2 - Raw Materials Inventory - Pineapple

2019 2020 2021 2022 2023

Total Annual Purchases 5 ₱18,900.00 ₱18,900.00 ₱19,278.00 ₱ 19,278.00 ₱ 19,663.56
Add: Ending Inventory - 945.00 992.25 1,013.51 1,014.58
Total Inventory ₱18,900.00 ₱19,845.00 ₱20,270.25 ₱20,291.51 ₱20,678.14
Multiply by: RM Invty Rate 5% 5% 5% 5% 5%
Raw Materials - Pineapple, End ₱945.00 ₱992.25 ₱1,013.51 ₱1,014.58 ₱1,033.91

Schedule 6.3 - Raw Materials Inventory - Brown Sugar

2019 2020 2021 2022 2023

Total Annual Purchases 5 ₱ 16,560.00 ₱ 16,560.00 ₱ 16,891.20 ₱ 16,891.20 ₱ 17,229.02
Add: Ending Inventory - 828.00 ₱869.40 ₱888.03 ₱ 888.96
Total Inventory ₱ 16,560.00 ₱ 17,388.00 ₱ 17,760.60 ₱ 17,779.23 ₱ 18,117.99
Multiply by: RM Invty Rate 5% 5% 5% 5% 5%
Raw Materials - Brown Sugar, End ₱ 828.00 ₱ 869.40 ₱ 888.03 ₱ 888.96 ₱ 905.90

109
 Schedule 6.4 - Raw Materials Inventory - Low-fat Milk

2019 2020 2021 2022 2023

Total Annual Purchases 5 ₱ 54,600.00 ₱ 54,600.00 ₱ 55,692.00 ₱ 55,692.00 ₱ 56,805.84
Add: Ending Inventory 0 ₱ 2,730.00 12 12 12
Total Inventory ₱ 54,600.00 ₱ 57,330.00 ₱ 55,704.00 ₱ 55,704.00 ₱ 56,817.84
Multiply by: RM Invty Rate 5% 5% 5% 5% 5%
Raw Materials - Low Fat Milk, End ₱ 2,730.00 ₱ 2,866.50 ₱ 2,785.20 ₱ 2,785.20 ₱ 2,840.89

Schedule 6.5 - Raw Materials Inventory - Crushed Ice

2019 2020 2021 2022 2023

Total Annual Purchases 5 ₱ 15,600.00 ₱ 15,600.00 ₱ 15,912.00 ₱ 15,912.00 ₱ 16,230.24
Add: Ending Inventory 0 780.00 819.00 836.55 837.43
Total Inventory ₱ 15,600.00 ₱ 16,380.00 ₱ 16,731.00 ₱ 16,748.55 ₱ 17,067.67
Multiply by: RM Invty Rate 5% 5% 5% 5% 5%
Raw Materials - Crushed Ice, End ₱ 780.00 ₱ 819.00 ₱ 836.55 ₱ 837.43 ₱ 853.38

110
 Schedule 7 - Direct Labor

2019 2020 2021 2022 2023

Daily Rate - Bartender ₱ 355.00 ₱ 355.00 ₱ 362.10 ₱ 362.10 ₱ 369.34
Multiply: Working days in a
Year 270 270 270 270 270
Annual Wage ₱ 95,850.00 ₱ 95,850.00 ₱ 97,767.00 ₱ 97,767.00 ₱ 99,722.34
Multiply: No. of Workers 1 1 1 1 1
Total Bartender Salary ₱ 95,850.00 ₱ 95,850.00 ₱ 97,767.00 ₱ 97,767.00 ₱ 99,722.34

Total Direct Labor ₱ 95,850.00 ₱ 95,850.00 ₱ 97,767.00 ₱ 97,767.00 ₱ 99,722.34

Schedue 8 - Manufacturing Overhead

Schedule 2019 2020 2021 2022 2023

Variable Overhead
Indirect Materials 9 ₱ 33,836.50 ₱ 35,423.50 ₱ 37,194.50 ₱ 39,153.00 ₱ 41,006.00
Allowance for Wastage 43 3,675.00 3,675.00 3,748.50 3,748.50 3,823.47
Total Variable Overhead ₱ 37,511.50 ₱ 39,098.50 ₱ 40,943.00 ₱ 42,901.50 ₱ 44,829.47

Fixed Overhead
Production Supplies 11 ₱ 2,730.00 ₱ 2,730.00 ₱ 2,730.00 ₱ 2,730.00 ₱ 2,730.00
Utilities Expense 14 26,400.00 26,400.00 27,192.00 27,192.00 28,007.76
Leasehold
2,205.00 2,205.00 2,205.00 2,205.00 2,205.00
Improvement 16
Depreciation Expense 21 5,702.50 5,702.50 5,702.50 5,702.50 5,702.50
111
Total Fixed Overhead ₱ 37,037.50 ₱ 37,037.50 ₱ 37,829.50 ₱ 37,829.50 ₱ 38,645.26
Total Manufacturing Overhead ₱ 74,549.00 ₱ 76,136.00 ₱ 78,772.50 ₱ 80,731.00 ₱ 83,474.73

Schedule 9 - Indirect Materials

Particulars 2019 2020 2021 2022 2023

Plastic Cups 9,639 10,121 10,627 11,158 11,716 in units
Price ₱ 3.00 ₱ 3.00 ₱ 3.00 ₱ 3.00 ₱ 3.00
Total ₱28,917.00 ₱30,363.00 ₱31,881.00 ₱33,474.00 ₱ 35,148.00

Straw 9,639 10,121 10,627 11,158 11,716 in units

Price ₱ 0.50 ₱ 0.50 ₱ 0.50 ₱ 0.50 ₱ 0.50
Total ₱ 4,819.50 ₱ 5,060.50 ₱ 5,313.50 ₱ 5,579.00 ₱ 5,858.00

1L Bottle 10 0 0 10 0 in units
Price ₱ 10.00 ₱ 10.00 ₱ 10.00 ₱ 10.00 ₱ 10.00
Total ₱ 100.00 ₱ - ₱ - ₱ 100.00 ₱ -
Total Cost of Indirect
₱33,836.50 ₱35,423.50 ₱37,194.50 ₱39,153.00 ₱ 41,006.00
Materials

112
 Schedule 10 - Cleaning Supplies

Unit
Particulars Quantity Unit Cost 2019 2020 2021 2022 2023
Broom 2 pcs ₱20.00 ₱ 40.00 ₱ 40.00 ₱ 40.00 ₱ 40.00 ₱ 40.00
Dustpan 2 pcs 45.00 90.00 90.00 90.00 90.00 90.00
Garbage Can 2 pcs 175.00 350.00 - - 350.00 -
Trash Bags 288 pcs 15.00 4,320.00 4,320.00 4,320.00 4,320.00 4,320.00
Cleaning Detergent 12 pcs 60.00 720.00 720.00 720.00 720.00 720.00
Rags 3 pcs 40.00 120.00 120.00 120.00 120.00 120.00
Mop 1 pc 169.00 169.00 169.00 169.00 169.00 169.00
Sanitary Mask 2 pcs 50.00 100.00 100.00 100.00 100.00 100.00
Total ₱ 5,909.00 ₱ 5,559.00 ₱ 5,559.00 ₱ 5,909.00 ₱ 5,559.00

Schedule 11 - Production Supplies

Unit
Particulars Quantity Unit Cost 2019 2020 2021 2022 2023
Apron 2 pcs. ₱25.00 ₱ 50.00 ₱ 50.00 ₱ 50.00 ₱ 50.00 ₱ 50.00
Hairnet 1 pack 12.00 12.00 12.00 12.00 12.00 12.00
Measuring Cup 2 pcs. 79.00 158.00 158.00 158.00 158.00 158.00
Ladle 3 pcs. 50.00 150.00 150.00 150.00 150.00 150.00
Knife 3 pcs. 100.00 300.00 300.00 300.00 300.00 300.00
Gloves 2 dozen 125.00 250.00 250.00 250.00 250.00 250.00
Strainer 1 pc. 50.00 50.00 50.00 50.00 50.00 50.00
Kitchen Towel 2 pcs. 50.00 100.00 100.00 100.00 100.00 100.00
113
Chopping Board 1 pc. 150.00 150.00 150.00 150.00 150.00 150.00
Microwave Safe Containers 5 pcs. 28.00 140.00 140.00 140.00 140.00 140.00
Straw Holder 1 pc. 200.00 200.00 200.00 200.00 200.00 200.00
Bowl 2 pcs. 85.00 170.00 170.00 170.00 170.00 170.00
Cooler 1 pc 300.00 300.00 300.00 300.00 300.00 300.00
Funnel 5 pcs. 50.00 250.00 250.00 250.00 250.00 250.00
Serving Spoon 3 pcs. 150.00 450.00 450.00 450.00 450.00 450.00
Total ₱2,730.00 ₱2,730.00 ₱2,730.00 ₱2,730.00 ₱2,730.00

Schedule 12 - 13th Month Pay

2019 2020 2021 2022 2023

Bartender
Daily Rate ₱ 355.00 ₱ 355.00 ₱ 362.10 ₱ 362.10 ₱ 376.58
x No. of Operating Days 270 270 270 270 270

Annual Salary per Worker ₱95,850.00 ₱95,850.00 ₱97,767.00 ₱97,767.00 ₱101,677.68

Divided by Total No. of Months 12 12 12 12 12
Monthly Salary per Worker ₱ 7,987.50 ₱ 7,987.50 ₱8,147.25 ₱ 8,147.25 ₱ 8,473.14
x No. of Stall Employee 1 1 1 1 1
13th Month Salary ₱ 7,987.50 ₱ 7,987.50 ₱ 8,147.25 ₱ 8,147.25 ₱ 8,473.14
Total 13th Month Salaries ₱ 7,987.50 ₱ 7,987.50 ₱ 8,147.25 ₱ 8,147.25 ₱ 8,473.14

114
 Schedule 13 - Rent Expense

No. of
Cost months 2019 2020 2021 2022 2023
Rent Expense ₱5,000.00 9 ₱45,000.00 ₱45,000.00 ₱45,000.00 ₱45,000.00 ₱45,000.00
Security Deposit ₱5,000.00 1 5,000.00 - - - -
Advance 3-
₱5,000.00 3 15,000.00 15,000.00 15,000.00 15,000.00 15,000.00
months
Total ₱65,000.00 ₱60,000.00 ₱60,000.00 ₱60,000.00 ₱60,000.00

Schedule 14 - Utilities Expense

Particular Cost 2019 2020 2021 2022 2023

Electricity ₱42,000.00 ₱42,000.00 ₱42,000.00 ₱43,260.00 ₱43,260.00 ₱44,557.80
Water 10,800.00 10,800.00 10,800.00 11,124.00 11,124.00 11,457.72
Total ₱52,800.00 ₱52,800.00 ₱54,384.00 ₱54,384.00 ₱56,015.52

Allocation of
Expenses
Production ₱26,400.00 ₱26,400.00 ₱27,192.00 ₱27,192.00 ₱28,007.76
Selling ₱26,400.00 ₱26,400.00 ₱27,192.00 ₱27,192.00 ₱28,007.76

115
 Schedule 15 - Depreciation Expense - Production Equipment

2019 2020 2021 2022 2023

Blender ₱3,800.00 ₱3,800.00 ₱3,800.00 ₱3,800.00 ₱3,800.00

Divided by: Useful Life (in months) 12 12 12 12 12
Monthly Depreciation ₱ 316.67 ₱ 316.67 ₱ 316.67 ₱ 316.67 ₱ 316.67
Multiply: No. of Operating Months 12 12 12 12 12

Annual Depreciation ₱3,800.00 ₱3,800.00 ₱3,800.00 ₱3,800.00 ₱3,800.00

Refridgerator ₱4,300.00 ₱4,300.00 ₱4,300.00 ₱4,300.00 ₱4,300.00

Divided by: Useful Life (in months) 60 60 60 60 60
Monthly Depreciation ₱ 71.67 ₱ 71.67 ₱ 71.67 ₱ 71.67 ₱ 71.67
Multiply: No. of Operating Months 12 12 12 12 12
Annual Depreciation ₱ 860.00 ₱ 860.00 ₱ 860.00 ₱ 860.00 ₱ 860.00

Total Depreciation - Production Equipment ₱4,660.00 ₱4,660.00 ₱4,660.00 ₱4,660.00 ₱4,660.00

116
 Schedule 16 - Depreciation Expense - Leasehold Improvement

2019 2020 2021 2022 2023

Leasehold Improvements ₱22,050.00 ₱22,050.00 ₱22,050.00 ₱22,050.00 ₱22,050.00
Divided by: Useful Life (in months) 60 60 60 60 60
Monthly Depreciation ₱ 367.50 ₱ 367.50 ₱ 367.50 ₱ 367.50 ₱ 367.50
Multiply: No. of Operating Months 12 12 12 12 12
Annual Depreciation ₱ 4,410.00 ₱ 4,410.00 ₱ 4,410.00 ₱ 4,410.00 ₱ 4,410.00

Allocation of Leasehold Improvements

Percentage 2018 2019 2020 2021 2022

Manufacturing Overhead 50% ₱ 2,205.00 ₱ 2,205.00 ₱ 2,205.00 ₱ 2,205.00 ₱2,205.00

Selling Expense 50% 2,205.00 2,205.00 2,205.00 2,205.00 2,205.00
Total Leasehold Improvement ₱ 4,410.00 ₱ 4,410.00 ₱ 4,410.00 ₱ 4,410.00 ₱4,410.00
Depreciation

117
 Schedule 17 - Furnitures and Fixtures

2019 2020 2021 2022 2023

Working Chairs ₱ 1,275.00 ₱ - ₱ - ₱ - ₱ -
Working Table 1,500.00 - - - -
Industrial Fan 3,000.00 - - - -
Cabinet 1,500.00 - - - -
Fire Extinguisher 4,400.00 - - - -
Total Furnitures and Fixtures ₱ 11,675.00 ₱ - ₱ - ₱ - ₱ -

Schedule 18 - Depreciation of Furnitures and Fixtures

Schedule 2019 2020 2021 2022 2023

Furnitures and Fixtures 17 ₱11,675.00 ₱11,675.00 ₱11,675.00 ₱11,675.00 ₱11,675.00

Divided by Useful Life (in months) 60 60 60 60 60
Monthly Depreciation ₱ 194.58 ₱ 194.58 ₱ 194.58 ₱ 194.58 ₱ 194.58
Multiply: no. of Operating Months 12 12 12 12 12
Annual Depreciation ₱ 2,335.00 ₱ 2,335.00 ₱ 2,335.00 ₱ 2,335.00 ₱ 2,335.00

118
 Schedule 19 - Accumulated Depreciation

Schedule 2019 2020 2021 2022 2023

Blender 15 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00
Refrigerator 15 860.00 1,720.00 2,580.00 3,440.00 4,300.00
Leasehold Improvements 16 4,410.00 8,820.00 13,230.00 17,640.00 22,050.00
Furnitures and Fixtures 18 2,335.00 4,670.00 7,005.00 9,340.00 11,675.00
Total Accumulated Depreciation ₱11,405.00 ₱19,010.00 ₱26,615.00 ₱34,220.00 ₱41,825.00

Schedule 20 - Net Book Value

Schedule 2019 2020 2021 2022 2023

Blender 15 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00
Less: Accumulated Depreciation 19 3,800.00 3,800.00 3,800.00 3,800.00 3,800.00
Blender, Net ₱ - ₱ - ₱ - ₱ - ₱ -

Refrigerator 15 ₱ 4,300.00 ₱ 4,300.00 ₱ 4,300.00 ₱ 4,300.00 ₱ 4,300.00

Less: Accumulated Depreciation 19 860.00 1,720.00 2,580.00 3,440.00 4,300.00
Refrigeerator, Net ₱ 3,440.00 ₱ 2,580.00 ₱ 1,720.00 ₱ 860.00 ₱ -

Production Equipment, Net ₱ 3,440.00 ₱ 2,580.00 ₱ 1,720.00 ₱ 860.00 ₱ -

Leasehold Improvements 16 ₱22,050.00 ₱22,050.00 ₱22,050.00 ₱22,050.00 ₱22,050.00

Less: Accumulated Depreciation 19 4,410.00 8,820.00 13,230.00 17,640.00 22,050.00
Leasehold Improvements, Net ₱17,640.00 ₱13,230.00 ₱ 8,820.00 ₱ 4,410.00 ₱ -
119
Furnitures and Fixtures 18 ₱11,675.00 ₱11,675.00 ₱11,675.00 ₱11,675.00 ₱11,675.00
Less: Accumulated Depreciation 19 2,335.00 4,670.00 7,005.00 9,340.00 11,675.00
Furnitures and Fixtures, Net ₱ 9,340.00 ₱ 7,005.00 ₱ 4,670.00 ₱ 2,335.00 ₱ -

Schedule 21 - Total Depreciation Expense

Schedule 2019 2020 2021 2022 2023

Blender 15 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00 ₱ 3,800.00
Refrigerator 15 860.00 860.00 860.00 860.00 860.00
Leasehold Improvements 16 4,410.00 4,410.00 4,410.00 4,410.00 4,410.00
Furnitures and Fixtures 18 2,335.00 2,335.00 2,335.00 2,335.00 2,335.00
Total Depreciation Expense ₱11,405.00 ₱11,405.00 ₱11,405.00 ₱11,405.00 ₱11,405.00

Schedule 22 - Professional Fee

2019 2020 2021 2022 2023

Bookkeeper
Compensation ₱ 3,000.00 ₱ 3,000.00 ₱ 3,000.00 ₱ 3,000.00 ₱ 3,000.00
Multiply: No. of Operating Months 12 12 12 12 12
Total Professional Fee ₱36,000.00 ₱36,000.00 ₱36,000.00 ₱36,000.00 ₱36,000.00

120
 Schedule 23 - Transportation Expenses

Particulars 2019 2020 2021 2022 2023

Transportation Expense ₱ 800.00 ₱ 800.00 ₱ 800.00 ₱ 800.00 ₱ 800.00

Schedule 24 - Permits and Licences

Particulars 2019 2020 2021 2022 2023

Barangay Clearance ₱ 100.00 ₱ 100.00 ₱ 100.00 ₱ 100.00 ₱ 100.00
Police Clearance 130.00 130.00 130.00 130.00 130.00
Mayor's Business Permit 500.00 500.00 500.00 500.00 500.00
Sanitary Permit 100.00 100.00 100.00 100.00 100.00
Health Certificate 50.00 50.00 50.00 50.00 50.00
Fire Safety Inspection 100.00 100.00 100.00 100.00 100.00
DTI Registration 500.00 - - - -
BIR Registration 500.00 500.00 500.00 500.00 500.00
Business Permit
Notarization 100.00 100.00 100.00 100.00 100.00
Documentary Stamp Tax 305.00 - - - -
Garbage Collection Fee 250.00 250.00 250.00 250.00 250.00

Total ₱2,635.00 ₱1,830.00 ₱1,830.00 ₱1,830.00 ₱1,830.00

121
 Schedule 25 - Advertising Expense

Particulars 2019 2020 2021 2022 2023

Tarpaulin ₱ 384.00 ₱ - ₱ - ₱ - ₱ -
Free
6,772.09 6,638.69 6,477.20 6,204.77 6,043.90
Sample
Phamphlets 900.00 - - - -
Loyalty
500.00 - - - -
Card
Total ₱8,556.09 ₱6,638.69 ₱6,477.20 ₱6,204.77 ₱6,043.90

122
 Schedule 26 - SSS Contribution

No. of Monthly Annual

Year Position Employees Salary Salary Monthly Contribution Annual Contribution Total Contribution
Employer Employee Employer Employee Monthly Annually
2019

Bartender 1 ₱18,460.00 ₱221,520.00 ₱1,178.70 ₱581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00

Total 1 ₱18,460.00 ₱221,520.00 ₱1,178.70 ₱581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00
2020

Bartender 1 ₱18,460.00 ₱221,520.00 ₱1,178.70 ₱581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00

Total 1 ₱18,460.00 ₱221,520.00 ₱1,178.70 ₱581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00
2021

Bartender 1 ₱18,829.20 ₱225,950.40 ₱1,178.70 ₱581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00

Total 1 ₱18,829.20 ₱225,950.40 ₱1,178.70 ₱581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00
2022

Bartender 1 ₱18,829.20 ₱225,950.40 ₱1,178.70 ₱581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00

Total 1 ₱18,829.20 ₱225,950.40 ₱1,178.70 ₱581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00
2023

Bartender 1 ₱19,205.78 ₱230,469.41 ₱1,178.70 ₱ 581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00

Total 1 ₱19,205.78 ₱230,469.41 ₱1,178.70 ₱ 581.30 ₱14,144.40 ₱6,975.60 ₱1,760.00 ₱21,120.00

123
 Schedule 27 - PhilHealth Contribution

No. Of Monthly Annual

Year Position Employees Salary Salary Monthly Contribution Annual Contribution Total Contribution
Employer Employee Employer Employee Monthly Annually
2019

Bartender 1 ₱ 18,460.00 ₱221,520.00 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00

Total 1 ₱ 18,460.00 ₱221,520.00 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00
2020

Bartender 1 ₱ 18,460.00 ₱221,520.00 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00

Total 1 ₱ 18,460.00 ₱221,520.00 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00
2021

Bartender 1 ₱ 18,829.20 ₱225,950.40 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00

Total 1 ₱ 18,829.20 ₱225,950.40 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00
2022

Bartender 1 ₱ 18,829.20 ₱225,950.40 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00

Total 1 ₱ 18,829.20 ₱225,950.40 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00
2023

Bartender 1 ₱ 19,205.78 ₱230,469.41 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00

Total 1 ₱ 19,205.78 ₱230,469.41 ₱ 225.00 ₱ 225.00 ₱5,400.00 ₱5,400.00 ₱ 450.00 ₱10,800.00

124
 Schedule 28 - PAG-IBIG Contribution

No. of Monthly Annual

Year Position Employees Salary Salary Monthly Contribution Annual Contribution Total Contribution
Employer Employee Employer Employee Montly Annually
2019

Bartender 1 ₱ 18,460.00 ₱221,520.00 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00

Total 1 ₱ 18,460.00 ₱221,520.00 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00
2020

Bartender 1 ₱ 18,460.00 ₱221,520.00 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00

Total 1 ₱ 18,460.00 ₱221,520.00 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00
2021

Bartender 1 ₱ 18,829.20 ₱225,950.40 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00

Total 1 ₱ 18,829.20 ₱225,950.40 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00
2022

Bartender 1 ₱ 18,829.20 ₱225,950.40 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00

Total 1 ₱ 18,829.20 ₱225,950.40 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00
2023

Bartender 1 ₱ 19,205.78 ₱230,469.41 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00

Total 1 ₱ 19,205.78 ₱230,469.41 ₱ 100.00 ₱ 100.00 ₱1,200.00 ₱1,200.00 ₱ 200.00 ₱2,400.00

125
 Schedule 29 - Operating Expense

General and Administrative Expenses Schedule 2019 2020 2021 2022 2023
Cleaning Supplies 10 ₱ 5,909.00 ₱ 5,559.00 ₱ 5,559.00 ₱ 5,909.00 ₱ 5,559.00
Utilities Expense 14 26,400.00 26,400.00 27,192.00 27,192.00 28,007.76
Depreciation Expense 21 5,702.50 5,702.50 5,702.50 5,702.50 5,702.50
SSS Contribution 26 14,144.40 14,144.40 14,144.40 14,144.40 14,144.40
Philhealth Contribution 27 5,400.00 5,400.00 5,400.00 5,400.00 5,400.00
PAG-IBIG Contribution 28 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00
Permits and Licenses 24 2,635.00 1,830.00 1,830.00 1,830.00 1,830.00
Research and Study Cost 7,225.00 - - - -
Total ₱ 68,615.90 ₱ 60,235.90 ₱ 61,027.90 ₱ 61,377.90 ₱ 61,843.66
Selling Expense
Advertising Expense 25 ₱ 8,556.09 ₱ 6,638.69 ₱ 6,477.20 ₱ 6,204.77 ₱ 6,043.90
Premium Expense 40 16,319.05 16,797.54 17,208.29 17,308.22 17,702.57
Rent Expense 13 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00
13th Month Pay 12 7,987.50 7,987.50 8,147.25 8,147.25 8,473.14
Leasehold Improvement 16 2,205.00 2,205.00 2,205.00 2,205.00 2,205.00
Professional Fee 22 36,000.00 36,000.00 36,000.00 36,000.00 36,000.00
Transportation Expense 23 800.00 800.00 800.00 800.00 800.00
Percentage Tax 35 17,061.03 17,914.17 18,809.79 19,749.66 20,737.32
Excise Tax 42 20,524.25 21,550.56 22,627.99 23,758.64 24,946.79
Total ₱ 148,928.67 ₱ 148,342.90 ₱ 149,647.53 ₱ 150,414.90 ₱ 151,961.93

Total Operating Expenses ₱ 217,544.57 ₱ 208,578.80 ₱ 210,675.43 ₱ 211,792.80 ₱ 213,805.59

126
 Schedule 30 - Accrued Electricity Expense

Items Schedule 2019 2020 2021 2022 2023

Total Electricity Expense 14 ₱42,000.00 ₱42,000.00 ₱43,260.00 ₱43,260.00 ₱44,557.80
Add: Accrued Electricity Beg. - 3,500.00 3,500.00 3,605.00 3,605.00
Total ₱42,000.00 ₱45,500.00 ₱46,760.00 ₱46,865.00 ₱48,162.80
Less: Payments
Prior ₱ - ₱ 3,500.00 ₱ 3,500.00 ₱ 3,605.00 ₱ 3,605.00
Current 38,500.00 38,500.00 39,655.00 39,655.00 40,844.65
Total ₱38,500.00 ₱42,000.00 ₱43,155.00 ₱43,260.00 ₱44,449.65
Accrued Electricity, End ₱ 3,500.00 ₱ 3,500.00 ₱ 3,605.00 ₱ 3,605.00 ₱ 3,713.15

Schedule 31 - Accrued Water Expense

Items Schedule 2019 2020 2021 2022 2023

Total Water Expense 14 ₱10,800.00 ₱10,800.00 ₱11,124.00 ₱11,124.00 ₱11,457.72
Add: Accrued Water Expense Beg. - 900.00 500.00 527.00 695.00
Total ₱10,800.00 ₱11,700.00 ₱11,624.00 ₱11,651.00 ₱12,152.72
Less: Payments
Prior ₱ - ₱ 900.00 ₱ 900.00 ₱ 527.00 ₱ 527.00
Current 9,900.00 9,900.00 10,197.00 10,197.00 10,502.91
Total ₱ 9,900.00 ₱10,800.00 ₱11,097.00 ₱10,724.00 ₱11,029.91
Accrued Water Expense,End ₱ 900.00 ₱ 900.00 ₱ 527.00 ₱ 927.00 ₱ 1,122.81

127
 Schedule 32 - Accrued PhilHealth Contribution

ITEMS Schedule 2019 2020 2021 2022 2023

Total PhilHealth Contribution 27 ₱ 5,400.00 ₱ 5,400.00 ₱ 5,400.00 ₱ 5,400.00 ₱ 5,400.00
Add: Accrued PhilHealth Contribution, beg. - 450.00 450.00 450.00 450.00
Total ₱ 5,400.00 ₱ 5,850.00 ₱ 5,850.00 ₱ 5,850.00 ₱ 5,850.00
Less: Payments
Prior ₱ - ₱ 450.00 ₱ 450.00 ₱ 450.00 ₱ 450.00
Current 4,950.00 4,950.00 4,950.00 4,950.00 4,950.00
Total ₱ 4,950.00 ₱ 5,400.00 ₱ 5,400.00 ₱ 5,400.00 ₱ 5,400.00
Accrued PhilHealth Contribution, end ₱ 450.00 ₱ 450.00 ₱ 450.00 ₱ 450.00 ₱ 450.00

128
 Schedule 33 - Accrued PAG-IBIG Contribution

Items Schedule 2019 2020 2021 2022 2023

Total Pag-IBIG Contribution 28 ₱1,200.00 ₱1,200.00 ₱1,200.00 ₱1,200.00 ₱1,200.00

Add: Accrued Pag-IBIG Contribution, beg. - 100.00 100.00 100.00 100.00
Total ₱1,200.00 ₱1,300.00 ₱1,300.00 ₱1,300.00 ₱1,300.00
Less: Payments
Prior ₱ - ₱ 100.00 ₱ 100.00 ₱ 100.00 ₱ 100.00
Current 1,100.00 1,100.00 1,100.00 1,100.00 1,100.00
Total ₱1,100.00 ₱1,200.00 ₱1,200.00 ₱1,200.00 ₱1,200.00
Acrued Pag-IBIG Contribution, end ₱ 100.00 ₱ 100.00 ₱ 100.00 ₱ 100.00 ₱ 100.00

Schedule 34 - Accrued SSS Contribution

Items Schedule 2018 2019 2020 2021 2022

Total SSS Contribution 26 ₱14,144.40 ₱14,144.40 ₱14,144.40 ₱14,144.40 ₱14,144.40
Add: Accrued SSS Contribution, beg. - 1,178.70 1,178.70 1,178.70 1,178.70
Total ₱14,144.40 ₱15,323.10 ₱15,323.10 ₱15,323.10 ₱15,323.10
Less: Payments
Prior ₱ - ₱ 1,178.70 ₱ 1,178.70 ₱ 1,178.70 ₱ 1,178.70
Current 12,965.70 12,965.70 12,965.70 12,965.70 12,965.70
Total ₱12,965.70 ₱14,144.40 ₱14,144.40 ₱14,144.40 ₱14,144.40
Acrued SSS Contribution, end ₱ 1,178.70 ₱ 1,178.70 ₱ 1,178.70 ₱ 1,178.70 ₱ 1,178.70

129
 Schedule 35 - PercentageTax

Schedule 2019 2020 2021 2022 2023

Gross Sales IS ₱ 568,701.00 ₱ 597,139.00 ₱ 626,993.00 ₱ 658,322.00 ₱ 691,244.00
Multiply by 3% 3% 3% 3% 3%
Percentage Tax
₱ 17,061.03 ₱ 17,914.17 ₱ 18,809.79 ₱ 19,749.66 ₱ 20,737.32
Expense

Schedule 36 - Accrued Percentage Tax

ITEMS Schedule 2019 2020 2021 2022 2023

Percentage Tax Payable 35 ₱17,061.03 ₱17,914.17 ₱18,809.79 ₱19,749.66 ₱20,737.32
Add: Accrued Percentage Tax, beg. - 1,421.75 1,492.85 1,567.48 1,645.81
Total ₱17,061.03 ₱19,335.92 ₱20,302.64 ₱21,317.14 ₱22,383.13
Less: Payments
Prior ₱ - ₱ 1,421.75 ₱ 1,492.85 ₱ 1,567.48 ₱ 1,645.81
Current 15,639.28 16,421.32 17,242.31 18,103.86 19,009.21
Total ₱15,639.28 ₱17,843.08 ₱18,735.16 ₱19,671.34 ₱20,655.02
Accrued Percentage Tax, End ₱ 1,421.75 ₱ 1,492.85 ₱ 1,567.48 ₱ 1,645.81 ₱ 1,728.11

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 Schedule 37 - Expanded Bookkeeper Withholding Tax

Schedule 2019 2020 2021 2022 2023

Annual Bookkeeper Fee 22 ₱ 36,000.00 ₱ 36,000.00 ₱ 36,000.00 ₱ 36,000.00 ₱ 36,000.00
Multiply by: EWT % Rate 8% 8% 8% 8% 8%
Expanded Withholding Tax ₱ 2,880.00 ₱ 2,880.00 ₱ 2,880.00 ₱ 2,880.00 ₱ 2,880.00

Schedule 38 - Total Accrued Liabilities

Items Schedule 2019 2020 2021 2022 2023

Professional Fee 22 ₱ 3,000.00 ₱ 3,000.00 ₱ 3,000.00 ₱ 3,000.00 ₱ 3,000.00
Accrued Electricity 30 3,500.00 3,500.00 3,605.00 3,605.00 3,713.15
Accrued Water 31 900.00 900.00 527.00 927.00 1,122.81
Accrued PhilHealth 32 450.00 450.00 450.00 450.00 450.00
Accrued Pag-IBIG Contribution 33 100.00 100.00 100.00 100.00 100.00
Accrued SSS Contribution 34 1,178.70 1,178.70 1,178.70 1,178.70 1,178.70
Accrued Percentage Tax 36 36.00 1,492.85 1,567.48 1,645.81 1,728.11
Accrued Expanded Bookkeeper Withholding Tax 37 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
Total Accrued Expenses ₱12,164.70 ₱13,621.55 ₱ 13,428.18 ₱ 13,906.51 ₱ 14,292.77

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 Schedule 39 - Premium Expense

Particular Schedule 2019 2020 2021 2022 2023

Units 481.95 506.05 531.35 557.90 585.80
Multiply: Unit Cost 3 ₱ 33.86 ₱ 33.19 ₱ 32.39 ₱ 31.02 ₱ 30.22
Cost of Premium ₱ 16,319.05 ₱ 16,797.54 ₱ 17,208.29 ₱ 17,308.22 ₱ 17,702.57

Schedule 40 - Income Tax

Schedule 2019 2020 2021 2022 2023

Income Before Tax IS ₱ 24,775.43 ₱ 52,609.35 ₱ 72,151.71 ₱100,364.88 ₱123,386.93
Deductions: Basic Personal Exemption - - - - -
Total Allowable Deductions ₱ - ₱ - ₱ - ₱ - ₱ -
Taxable Income ₱ 24,775.43 ₱ 52,609.35 ₱ 72,151.71 ₱100,364.88 ₱123,386.93
Income Tax Payable ₱ - ₱ - ₱ - ₱ - ₱ -

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 Schedule 41 - Excise Tax

Schedule 2019 2020 2021 2022 2023

Unit Sold 1 9,639 10,121 10,627 11,158 11,716
Multiply by: Litre per
0.354882 0.354882 0.354882 0.354882 0.354882
cup
Total Litres of Units 3,420.71 3,591.76 3,771.33 3,959.77 4,157.80
Multiply by: Litre per
₱ 6.00 ₱ 6.00 ₱ 6.00 ₱ 6.00 ₱ 6.00
cup
Excise Tax Payable ₱ 20,524.25 ₱ 21,550.56 ₱ 22,627.99 ₱ 23,758.64 ₱ 24,946.79

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 Schedule 42 - Allowance for Wastage

Schedule 2019 2020 2021 2022 2023

Annual Purchase of Pineapple 5 ₱18,900.00 ₱18,900.00 ₱19,278.00 ₱19,278.00 ₱19,663.56
Annual Purchase of Low-Fat Milk 54,600.00 54,600.00 55,692.00 55,692.00 56,805.84
Total Purchases 73,500.00 73,500.00 74,970.00 74,970.00 76,469.40
Multiply by: 5% Wastage 5% 5% 5% 5% 5%
Allowance for Wastage ₱ 3,675.00 ₱ 3,675.00 ₱ 3,748.50 ₱ 3,748.50 ₱ 3,823.47

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 FINANCIAL STATEMENT ANALYSIS

Financial Statements are prepared so that the financial information can be

used by various interested users to better understand and manage the business.

An important aspect of using financial statement is to help make better decisions,

especially as related to the financial impact of the decisions. Effective

interpretation and use of financial statement is important because poor

financial capitalization is a leading cause for financial stress and failure. The role

of financial statement is central to maintaining business competitiveness and

solvency.

Financial Analysis is used to understand the financial statements of the

relationship between the internal; analysis of financial condition and business

trends. The rate of financial analysis is to assess the various aspects of the

financial position and operating conditions, such as the solvency, operating

efficiency, profitability, growth capacity and so on.

Liquidity Ratio

It provides information about the firm’s ability to pay its current obligations

and continue operations. Based on results, the ratio that yields higher value is an

indication that the business possesses a huge margin of safety in paying short-

term debt. The interpretation of the ratio is of great help for the creditors to decide

whether they will allow a credit for the entity.

Current Ratio

Current Ratio = Current Assets

Current Liabilities
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 2019 2020 2021 2022 2023
Current Assets ₱ 89,536.12 ₱ 97,275.95 ₱102,832.83 ₱107,277.92 ₱114,576.19

Current Liabilities 12,044.70 13,501.55 13,308.18 13,786.51 14,172.77

Current Ratio 7.43 7.20 7.73 7.78 8.08

The data shows that the business would be able to pay the current liabilities

with its current assets due to higher current assets than the current liabilities. The

increasing ratios from 2019-2023 indicates that for every one-peso liability the

entity has more than cash available to pay off such debt.

Quick Ratio

Quick Ratio = Quick Assets

Current Liabilities

2019 2020 2021 2022 2023

Quick Assets ₱ 64,091.12 ₱71,340.65 ₱76,804.84 ₱ 80,887.17 ₱ 88,191.96
Current Liabilities 12,044.70 13,501.55 13,308.18 13,786.51 14,172.77
Current Ratio 5.32 5.28 5.77 5.87 6.22

The quick ratio of the business shows that it is still capable of paying off its

maturing obligations. Quick ratio is similar to current ratio except that the current

assets which are converted to cash quickly are the only included that signifies that

the company could pay in the very near term. The quick ratio of the company is

increasing every year meaning that more cash is entering the business and will be

able to pay off liabilities.

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 Solvency Ratio

Solvency ratio is used to measure the ability of the business to pay all its

current and noncurrent liabilities when they fall due. It indicates how solvent the

entity is and whether the cash flow is enough to fulfil its liabilities. The lesser the

solvency ratio, the greater chances it will fail to pay its debt obligations.

Debt-Equity Ratio

Debt-Equity Ratio = Total Liabilities

Total Owner’s Equity

Debt-equity ratio is a debt ratio used to measure a company’s financial

leverage, it is computed by dividing total liabilities by total owners’ or shareholders’

equity. The ratio is also used to indicate how much debt a business is using to

finance the business

2019 2020 2021 2022 2023

Total Liabilities ₱ 12,044.70 ₱ 13,501.55 ₱ 13,308.18 ₱ 13,786.51 ₱ 14,172.77
Total Owner's Equity 112,911.42 111,589.40 109,734.64 106,096.41 105,403.42
Current Ratio 0.10667 0.12099 0.12128 0.12994 0.13446

The data provided above shows that the business relies on the investment

of the owner and not of loans or debts. The debt-equity ratio is computed also

shows that the business can sustain its life without the help of outside or third-party

financing groups. Liabilities consists only of accrued liabilities and no loan has ever

taken place. In case the business decides to take a loan, they could easily pay

them.

Equity Ratio

Equity Ratio = Total Owner’s Equity

Total Assets

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 The equity ratio indicates the percentage of total assets provided by the

owners or stockholders towards the business. It is computed by dividing total

owners or shareholder’s equity by total assets to get the percentage.

2019 2020 2021 2022 2023

Total Owner's Equity ₱ 112,911.42 ₱ 111,589.40 ₱ 109,734.64 ₱ 106,096.41 ₱ 105,403.42
Total Assets 124,956.12 125,090.95 123,042.83 119,882.92 119,576.19
Current Ratio 90% 89% 89% 89% 88%

The data provided above is shown to be favorable to the business. Since

that the assets of the business are invested from the owner’s investment and not

of Bank Loans. This will also attract potential investors to finance the business and

the business will be able to pay off loans without problem.

Profitability Ratio

Profitability Ratio measures the ability of a business to generate profit from

its past performance and whether the business can continue generating profit in

the future. The ratio indicates whether the proposed business is profitable or not.

A profit is what is left of the revenue the business generates after it pays all

expenses directly related to the generation of the revenue.

Return on Sales

Return on Sales = Net Income (Loss) / Sales

2019 2020 2021 2022 2023

Net Income (Loss) ₱ 20,840.42 ₱ 48,677.98 ₱ 68,145.24 ₱ 96,361.77 ₱ 119,307.01
Sales 568,701.00 597,139.00 626,993.00 658,322.00 691,244.00

Return on Sales 4% 8% 11% 15% 17%

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 Return on sales is computed to determine the percentage of income after

deducting all expenses during the operations. The data shown above shows little

percentage of return on sales since net income is very low. but is still favorable

since no loss has incurred over the years.

Return on Assets

Return on Assets = Net Income (Loss) / Total Assets

2019 2020 2021 2022 2023

Net Income (Loss) ₱ 20,840.42 ₱ 48,677.98 ₱ 68,145.24 ₱ 96,361.77 ₱ 119,307.01
Total Assets 124,956.12 125,090.95 123,042.83 119,882.92 119,576.19
Return on Assets 17% 39% 55% 80% 100%

Return on assets is computed to determine the ratio that shows the

percentage of the profit earned in the business in relation to its assets. The data

shown above shows positive results since that all cost of assets can be recovered

and even shows how efficient the assets are.

Return on Equity

Return on Equity is the amount of net income returned as a percentage of

shareholders’ equity. It is an important indication of the firm’s profitability because

it determines how well the company is performing with the investment contributed

by its owners.

ROE = Net Income

Total Equity

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 Return on Equity

2019 2020 2021 2022 2023

Net Income (Loss) ₱ 20,840.42 ₱ 48,677.98 ₱68,145.24 ₱ 96,361.77 ₱ 119,307.01
Total Equity 112,911.42 111,589.40 109,734.64 106,096.41 105,403.42
Return on Assets 18% 44% 62% 91% 113%

The table shows that every year, the return on equity increases. It is an

indication that the company has been able to earn from the investment made. The

higher the percentage is the faster the recovery of investment occurs.

Contribution Margin

Contribution margin means a measurement of the profitability of a product.

The total contribution margin generated by an entity indicates the total earnings

available to pay for fixed expenses and to generate a profit.

Contribution Margin in Peso = Sales – Total Variable Cost

Contribution Margin

2019 2020 2021 2022 2023

Sales ₱ 568,701.00 ₱ 597,139.00 ₱ 626,993.00 ₱ 658,322.00 ₱691,244.00
Total Variable Cost 37,511.50 39,098.50 40,943.00 42,901.50 44,829.47
Contribution Margin
₱ 531,189.50 ₱ 558,040.50 ₱ 586,050.00 ₱ 615,420.50 ₱646,414.53
in Peso

Contribution Margin
93% 93% 93% 93% 94%
Ratio

The data shown above shows a possible income that could go towards the

business. This is a positive data since cost of variable is only a little percentage

that could take away contribution margin.

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 Schedule 2019 2020 2021 2022 2023
Variable
Overhead
Indirect
Materials 9 ₱33,836.50 ₱35,423.50 ₱37,194.50 ₱39,153.00 ₱41,006.00
Allowance
₱ 3,675.00 ₱ 3,675.00 ₱ 3,748.50 ₱ 3,748.50 ₱ 3,823.47
for Wastage 43

Total Variable Overhead ₱37,511.50 ₱39,098.50 ₱40,943.00 ₱42,901.50 ₱44,829.47

Fixed
Overhead
Production
₱ 2,730.00 ₱ 2,730.00 ₱ 2,730.00 ₱ 2,730.00 2,730.00
Supplies 11
Utilities
26,400.00 26,400.00 27,192.00 27,192.00 28,007.76
Expense 14
Leasehold
2,205.00 2,205.00 2,205.00 2,205.00 2,205.00
Improvement 16
Depreciation
5,702.50 5,702.50 5,702.50 5,702.50 5,702.50
Expense 21
Total Fixed
Overhead ₱37,037.50 ₱37,037.50 ₱37,829.50 ₱37,829.50 ₱38,645.26
Total Manufacturing
Overhead ₱74,549.00 ₱76,136.00 ₱78,772.50 ₱80,731.00 ₱83,474.73

Break-Even Analysis

Break-even Analysis depicts the point in which sale and expenses will

break-even or will equal to a zero income or loss. It determines how much shall be

produced or sold at a minimum to ensure that the project does not lose money.

Composite BEP in Peso= Fixed Cost______

Contribution Margin Ratio

Break-Even Analysis

2019 2020 2021 2022 2023

Fixed Cost ₱37,037.50 ₱ 37,037.50 ₱37,829.50 ₱37,829.50 ₱38,645.26
Contribution Margin 93% 93% 93% 93% 94%
BEP in Peso ₱39,653.01 ₱ 39,632.49 ₱40,472.37 ₱40,466.63 ₱41,325.35
Divide: Selling Price 59.00 59.00 59.00 59.00 59.00
BEP in Units 672.08 671.74 685.97 685.88 700.43
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 The data above shows that only small number of units is needed to be sold

to recover the cost invested in the business without experiencing any lost or profit

during the operating year. It shows a growing number throughout the year since

costs of Direct Materials are increasing.

Payback Period

Payback Period refers to the period of time required for the amount to be

invested in an asset to be repaid by the net cash flow generated by the asset. It is

the simple way to evaluate the risk associated with the proposed project.

Net Present Value Method = Present Value of Cash Inflows - Cost of

Investment

Cost of
Present Value
Investment Net Cash PV of Cash
Year PVF Balance Payback
to be Inflow Inflows
Years
Recovered
1 ₱ 112,071.00 ₱ 28,823.92 0.893 ₱ 25,739.76 ₱ 86,331.24 1
2 86,331.24 71,249.77 0.797 56,786.07 29,545.16 1
3 29,545.16 68,145.24 0.712 48,519.41 - 0.61
4 - 90,479.67 0.636 57,545.07 -
5 - 115,170.71 0.512 58,967.40 -

Total Present Value Payback Years: 2.61 years

assume Cost of Capital is = 12%

Within 2.61 years the business can recover the investment spent by the sole

proprietor. The lower the amount of Payback years, means the faster and bigger

the income that the business experiences.

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 SENSITIVITY ANALYSIS

The current trends and expectations that the management believes it

can attain at a future date are incorporated in the five-year projected financial

statement. It presents a summary-level income statement and balance sheet

that typically derived from a revenue trend line, as well as expense

percentages that are based on the current proportions of expenses to

revenues.

Uncertainty of business impact can be analyzed by means of a sensitivity

analysis to gain more insight into the operation of the business. This study aimed

to compare on how one variable may be affected by changes in another variable

with a focus on financial performance. The following are used in the assumptions

of the sensitivity analysis:

Table 21

Scenarios Used in the Analysis

Scenario 1 Scenario 2 Scenario 3

Sales 3% Decrease 3% Decrease
Direct Materials 3% increase 3% increase
Direct Labor 5% increase 5% increase
Cleaning Supplies 2% increase 2% increase
Production Supplies 2% increase 2% increase
Rent Expense 10% increase 10% increase
Utilities Expense 2% increase 2% increase
Transportation Expense 7% increase 7% increase

Some operating expenses and the cost of goods sold are assumed to

increase 5% for all the scenarios due to the unstable economy that will result in

increase of price of each expenses and materials. The assumption of 3% decrease

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 of revenues is based on the expected growing beverage industry. This will result

to various choices available in the market to fulfil the satisfaction of the

consumers.

COMPARATIVE

2019 2020 2021 2022 2023

Net Income
Original ₱ 20,840.42 ₱ 48,677.98 ₱ 68,145.24 ₱ 96,361.77 ₱119,307.01
Scenario 1 3,779.39 30,763.81 49,335.45 76,612.11 98,569.69
Scenario 2 (50,139.73) (124,343.04) (107,974.80) (81,911.38) (63,897.50)
Scenario 3 (67,200.76) (142,257.21) (126,784.59) (101,661.04) (84,634.82)

Return on Equity
Original 18% 44% 62% 91% 113%
Scenario 1 3% 21% 25% 28% 27%
Scenario 2 -83% 195% 63% 32% 20%
Scenario 3 -154% 144% 56% 31% 21%

Break-even Point in
Peso Sales
Original ₱531,189.50 ₱558,040.50 ₱586,050.00 ₱615,420.50 ₱646,414.53
Scenario 1 514,128.47 540,126.33 567,240.21 595,670.84 625,677.21
Scenario 2 474,981.32 502,189.32 528,656.64 557,670.14 587,431.99
Scenario 3 457,920.29 484,275.15 509,846.85 537,920.48 566,694.67

Payback Period
Original 2.61
Scenario 1 3.80
more than 5
Scenario 2
years
more than 5
Scenario 3 years

For Net income, Scenario 2 is much more sensitive than scenario 1 but of

all the 3 scenarios, scenario 3 is the most sensitive since it has the lowest numbers

amongst the rest. This means that if sales go down, the business could still earn

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income, if the prices go up and both sales go down and prices goes up, both

scenarios are not favorable to the business.

For Return on Equity, Scenario 2 is much sensitive than scenario 1 but of

all the 3 scenarios, scenario 3 is the most sensitive since it has the lowest

percentage of return. This means that when expenses go up and sales remains

the same or goes down the business would need to raise the price in order to

regain the lost potential income.

For Break-even point in sales, Scenario 2 is much sensitive than scenario

1 but of all the 3 scenarios, scenario 3 is the most sensitive since it has the lowest

break-even in peso sales. The business would need to increase the price in order

to even lower down the break-even point. The lower the amount of break-even

shows a positive result since that the break-even will be easily met if breakeven is

low.

Conclusion

Based on the changes of variables assumed by the proponents, scenario 3

delineates the lower net income compared to scenario 1 and 2. It is concluded that

in this proposed business, the increase of costs and expenses is more sensitive

than the decrease of revenues. The impact of having both the decrease of

revenues and increase of costs and expenses is the most sensitive among the

three scenarios. Since that scenario 3 shows that worst possible scenario that the

business could experience if it were to happen. If either scenario 2 or 3 is to occur

the business would be at stake if no proper action will be taken in order to adjust,

adapt and survive such scenario from ever occurring.

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 CHAPTER VIII

SOCIO - ECONOMIC DESIRABILITY

Social economics is a very significant aspect since it examines how social

norms and ethics and other social philosophies that influence consumer behavior

to shape an economy. The aim is to earn a profit. However, while doing so, the

proposed company should also take account of its corporate social responsibility.

Our community is continuously growing and improving, that is why it is very fitting

that the proposed business’ operation will relate to the public’s advantage. Also,

the society and the economy at large can also benefit in another way. This

proposed business will give socio - economic benefits to the respective sectors:

Government

One of the duties of the government is to provide its people with services.

They are embedded with the power to collect taxes, the lifeblood of the country,

from its people. The taxes collected from the proposed business will raise more

revenues for the government to execute their projects. Furthermore, the

compliance of necessary permits and licenses helps in securing the country’s

productivity.

Community

Every business should promote the benefit and general welfare of the

society. Being involved is one way of doing so in the society. An organization can

support a local charity; sponsor a local sports team, offer scholarships and job

opportunities as a way of showing community involvement. In that way, the

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business is giving back to the community for its help in alleviating the former among

competitors.

Competitors

It is natural for a business to face competitions. The proposed product will

surely standout if is known by its competitors. Competing is an avenue for

innovation. The organization can use this knowledge to come up with new

marketing strategies; such as how to improve the product’s distribution and to

enhance customer loyalty, which could improve the business performance. Also,

the business’ competitors would be inspired to upgrade their business practices

and standards. They are challenged to provide better quality products to their

customers.

Target Market

Businesses have goals established, and one of its goals is profit

making which is only possible with the existence of consumers. A target market is

recognized to attract customers. In this way, the business can focus on whom they

will sell their product. If the industry is implemented, there will be a provision of a

kind of medical drink that prevents illness and promotes living which will satisfy the

needs and wants of the preferred market.

Related Industries

The implementation of the business can open opportunities to others. Thus,

related industries will also be benefited. Such as the utility companies like in

electrical and water companies. There will be an increase in their revenues once

147
the project will be implemented because there will be more demand for their

products and services.

148
 Figure 20

SCHEMATIC DIAGRAM OF SOCIO- ECONOMIC DESIRABILITY OF THE PROJECT

SECTORS BENEFITS OUTCOME

New and better public projects

Government Increase in revenues
and services

The Employment and community

Community Unemployment decreases
development
Proposed
Production
and Inspired to improve the quality
Competitors Better quality products
of product
Desirability
of Calabash
Smoothie Target Market Healthier and affordable
Satisfaction of customers
products

Related Increase demand of their

Increase of income
industries products and services

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 CHAPTER IX

STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS

ANALYSIS

To achieve a stable competitive environment, the company must be able to

identify factors that would affect the firm internally and externally. Internal factors

are those that might affect the business directly in which the entity has control over

such circumstances. The SWOT Analysis is a framework that helps to be aware of

all the factors in making a business decision. It stands for strengths, weaknesses,

opportunities, and threats. Performing SWOT Analysis is a way to facing

challenges and finding ways to enhance business profitability. These factors refer

to firm’s strengths and weaknesses that the company may have and the trials they

are facing. On the other hand, external factors are those that might affect the

business indirectly. It is primarily impulsive by outside parties in which the company

has no control. A proper analysis is made to make a better decision for the firm’s

stability. These factors must be analyzed and evaluated because it can obstruct

the attainment of objectives of the business

Next page is Figure 21, showing the 4-cell SWOT Matrix. Its discussions

will be presented in the succeeding pages.

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 Figure 21

SWOT MATRIX

STRENGTHS WEAKNESS

• Natural Flavouring • First Local Production

• Beneficial for Healthy Living Company
• Psychological Pricing Strategy • One flavor offered
• Loyalty Card
CONVERT • Can easily be imitated

MATCH

• Very keen competition

• Substitutes
• Uncertain Economic
CONVERT Situations
• Stable Demand due to Tropical
Climate of the Philippines
• Franchise Opportunities
• Growing Beverage Market
THREATS

SWOT ANALYSIS

SWOT Analysis is a basic framework for determining the positive and

negative factors that affect in attaining the goals of the business. It will help the

company to identify the cause of errors in prospering it and converting these into

remedial actions to address such errors.

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 STRENGTHS

Strengths are the properties of every organization that answers the

questions “What do we do well?” or “What is good for our product?” which are

helpful in making decisions for the company. Strengths are the internal factor that

the company can only control. It helps the company in determining their distinction

towards other firms. It is the edge of the business in the industry.

Natural Flavouring

The business aims to feature natural flavors that direct competitors have

nothing to offer. The product is made of natural flavoring that would present the

customers a beverage that suits to their lifestyle. The ingredients for this product

includes calabash juice, pineapple, honey, crushed ice, and low-fat milk. It can

provide a thirst quencher that consumers would enjoy and at the same time

promoting better health.

Loyalty Card

The proposed business gives loyalty cards to customers in which they offers

a reward for their regular purchase of the product. Through this, the proposed

company can get to know well its customers; it’s also a tried and trusted method

of keeping them.

Beneficial for Healthy Living

The product being organic and natural, contain a lot of health benefits which

provides consumers advantage regarding its satisfying taste and enhanced health.

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Psychological Pricing Strategy

The proposed business will be using psychosomatic pricing strategy in

which it influences the way that the customers view the product. The Calabash

Smoothie costs at Php 59.00 which attracts customers more than when it costs at

Php 60.00. Customers are more likely to get swayed by the incremental price

reductions advocated under psychological pricing.

WEAKNESSES

Weaknesses are vulnerabilities of a business; they are a hindrance in

performing at its optimum level. Weaknesses interfere with the business’

competitive position and its opportunity to post positive returns on the investment.

Knowing the business’ weaknesses is important because in doing so, the areas

that need improvement is identified.

First Local Production Company

The proposed business would be the first to venture into the production of

smoothie out of Calabash locally. Since unknown in the city of Cebu, there would

be limited customers who would initially patronize the product.

Unstable Supply of Raw Materials (Calabash Fruit)

There is an unstable supply of Calabash Fruit. People selling it only grow

the fruit in their backyard. It lacks known plantation that produces sufficient quantity

of Calabash Fruit in the country. Thus, this is indeed a weakness.

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Can Easily be Copied

The procedure to make the proposed product is not complex making it

easily be imitated.

One Flavor Offered

The business offers only one flavor which is the pineapple flavor. Customers

may find this dull because of the lack of variety.

OPPORTUNITIES

Opportunities are circumstances or factors that can give the business a

boost in all aspects of the business from its image to its sales. It involves future

trends, economy, funding sources, demographics, physical environment and so

much more. Determining business opportunities will help future progress once the

project is considered as a reality.

Stable Demand Due to Tropical Climate of the Philippines

The Philippines only experience two climates: sunny and rainy. And each

atmosphere mostly lasts for six months or half a year. During the sunny season,

the temperature in the Philippines is extremely burning. And this will cause its

citizens to thirst and would find something to drink to quench such thirst. And such,

the product would fulfill the need while at the same time would give health benefits

to the consumers.

Franchise Opportunities

It is probable for every business to grow and to locate another shop in

another location. With the right amount of capital and planning, it is possible for the

154
entity to let people franchise its name to supply the demand in other locations. If

the product will hit the market very positively and it establishes a name for itself, a

probable demand in another place is decided.

Growing Beverage Market

Food and Beverages always complement each other, but compared to

beverages, a lot of people will most likely prefer food because of its variety of

combinations. But nowadays, drinks are beginning to keep up with the same

multiplicity as food. As people demands for innovation and something new or

unusual, the product of the study will fit since a smoothie out of calabash is not

known to greater part of the population.

THREATS

Business threats are anything that can adversely affect its performance and

achievement of a company’s goals. These are external and negative factors that

do not benefit anything and are beyond the control of the company. Taking them

into account can help in making the best decisions and by not doing so can cause

sudden damage to the corporation.

Competitors

Since the nature of the product is quite ordinary in the market, potential

competitors are everywhere making the product less special in the eyes of the

prospective consumers. The company might have a problem in securing a market

share from among those well-established and even small players.

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Substitutes

There are a lot of existing products nowadays that is used as a substitute

for a Calabash Smoothie. Although the product promotes a healthy lifestyle,

consumers are already accustomed to commercial drinks that are well-known.

Uncertain Economic Situations make the Product not a basic need

If prospective consumers do not need the product, there will be no sales.

When the economy is unstable, and once the customers’ salary tightens, the

budget for food likewise would go down. Hence, the beverage being not a

necessary part of the meal; it may potentially affect the sales of the product.

CONVERSION OF WEAKNESSES TO STRENGTH

First Local Production Company

The business is the first calabash smoothie manufacturing in Cebu City.

There are no direct competitors as of this time which is good for a start-up

business.

Unstable Supply of Raw Material (Calabash Fruit)

The current unstable supply of raw material is converted into partnering

other businessman willing to establish a calabash plant to sustain the growing

demand in the market.

Can easily be copied

The strength of the original idea about the product is protected by applying

a patent for the concept. Through this, the signature product will continue to

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produced and be patronized by many consumers without any fear of being

imitated.

CONVERSION OF THREATS TO OPPORTUNITIES

Competitors

In this industry, competitors are already established. However, with the

uniqueness of the proposed product, this threat is expected not to have a

significant impact on its demand. Its taste can provide satisfaction to the

consumers as well as the health benefit.

Substitutes

Substitute is a threat in a beverage industry due to a market with many

competitors. It can make the business more competitive in marketing the product

to the consumers. It is necessary to consider the nuances of the company and the

substitutes to properly evaluate the competitive structure and profit potential of a

market.

Uncertain Economic Situation

The threat to business confidence, growth and prosperity is economic

uncertainty. Many entrepreneurs see economic doubt as anything but a bad

thing. In an uncertain business world, one thing is certain; entrepreneurs will find

a way to turn that uncertainty to their advantage. It is the time where the business

needs to focus on their employees, flexible workers, and suppliers. It will challenge

them to improve and develop the mindset, skills, and behaviors of the employees

that is focused on the business core purpose.

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 MATCHING STRENGTHS TO OPPORTUNITIES

Filipinos are free spirited people who like to explore and experience

something new. With the Miracle Smoothie, it will make its way to the growing

beverage market industry catering the demands by offering nutritious drink and

innovating the typical smoothie that the Filipinos frequently consume.

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 CHAPTER X

SUMMARY, FINDINGS, CONCLUSION, AND RECOMMENDATIONS

SUMMARY

This feasibility study was conducted to ascertain the viability of “A Proposed

Production and Distribution of Calabash Smoothie.” The following questions were

answered:

1. Is the Proposed Production and Distribution of Calabash Smoothie

feasible under each of the following aspects:

1.1 Technical;

1.2 Marketing;

1.3 Management;

1.4 Taxation and Legal;

1.5 Financing;

1.6 Financial;

1.7 Socio-Economic Desirability; and

1.8 Strengths, Weaknesses, Opportunities and Threats

2. Based on the findings, what recommendations is given for the proposed

project?

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 FINDINGS

Based on the data presented in the previous chapters, the following are

summarized:

Technical Aspect

The ingredients of Miracle Smoothie are calabash fruit, pineapple chunks,

low –fat milk, honey and crushed ice. The smoothie is rich in nutrients such as

Vitamin B1 (Thiamine), Vitamin C (Ascorbic Acid), Carbohydrates, Protein,

Calcium, Iron, Potassium, Sodium, and Fat which could help prevent major

diseases such as cardiovascular diseases and certain cancers. The production of

the calabash smoothie will be at Jones Avenue Brgy. Sambag 1 Cebu City. The

product will be positioned in the market as a new and healthier beverage compared

to commercially available drink in the market.

Marketing Aspect

The target market for the proposed project is the health enthusiast joggers,

athletes, and customers at the Cebu City Sports Center near Abellana National

High School. Based on the data gathered from the respondents, the majority of

88% are only interested in trying the Miracle Smoothie. The gathering of data is

done by surveying in the location. Questionnaires are prepared by the proponents

based on the total population needed for the breakdown. The proponents saw a

substantial opportunity and demand for the new business which can penetrate the

market. There is the highest probability that the product will be purchased in the

market as its market share is projected to increase every year. The total cost of

the product is calculated first before setting the price of the product. And then the

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researchers decided to set it at a reasonable price of P59.00. The researchers

settled to increase the charge every year by P3.00 also depending on the increase

of the material cost since most of it increases every year.

Miracle Smoothie as a start-up business has its goal regarding promotion:

to be known in public, make the product trend, and generate profit easily. These

are accomplished through creating a promotional strategy and taking steps and

efforts to introduce to the community by creating activities. The promotional mix

tools that the business will be using comprise print media advertising, free

samples, and online marketing.

Management Aspect

The business will start as a sole proprietorship type of business since it will

require smaller capital to start such business. Also, the proposed project is

manageable by one person since only a small number of personnel will be hired,

trained and supervised to maintain the quality of the product.

Employees are given incentives to motivate them in their work. The

business has also crafted some policies to regulate and to make sure that its

employees will perform well.

Legal and Taxation Aspect

The proposed project should comply with the following legal requirements

namely: Department of Trade and Industry Registration, Barangay Clearance,

Police Clearance, Sanitary Permit, Fire Safety Inspection Permit, Bureau of

Internal Revenue Registration, Application for Social Security System, Application

for Philippine Health Insurance, and Application for PAG-IBIG.

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 Also, the business would be subjected to pay income tax, documentary

stamp tax, withholding tax, expanded withholding tax and percentage tax.

Financing Aspect

Since the proposed project is a sole proprietorship, funds are sourced from

the owner’s personal savings with additional resources borrowed from institutional

lenders such as banks and well-off individuals. The start-up capital of the proposed

project is P152.007.40. This amount would be used to cover the necessary

preliminary costs of the business which includes the initial operating expenses,

materials, equipment and other costs essential for the operation of the industry.

Financial Aspect

The financial aspect of the proposed business shows that it will be profitable

starting the first year of the operation. Regarding its sensitivity, the scenario has

the worst impact of all due to the assumption of decreasing the revenues and

increasing costs and expenses.

Socio-Economic Desirability

The project is socially and economically desirable. Most of the sectors in

the community benefit when this proposed plan be implemented. The target market

can have the medical drink that prevents illness and promotes living which will

satisfy their needs and wants. It can also open opportunities to other sectors

especially if employment be given.

SWOT Analysis

The business has its strength, weaknesses, opportunities, and threats that

would help in making future decisions. SWOT matrix is used to illustrate those

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factors mentioned. It involves specifying the objectives and identifying the internal

and external factors that are favorable and unfavorable to achieve the business

objectives. Identifying the SWOT is vital because this is the way of knowing the

possible step to make the best plan to reach the objectives. SWOT analysis is also

helpful in building organizational or personal strategy.

CONCLUSION

After evaluating all the results in all the gathered information and

compilations in this study, the researchers concluded that it is not technically

feasible based on the evaluation of the Research Ethics Board because of the

poisonous substance of the calabash fruit. As per the evaluation result, it

suggested seeking for the second opinion. Thus, researchers found other studies

from Notre Dame of Dadiangas University that revealed that the “calabash extracts

can prevent blood vessel growth and development and are not poisonous.” Other

studies also showed that “According to the Philippine Council for Health Research

and Development (PCHRD), a line agency of the Department of Science and

Technology (DOST), the students’ analysis mentioned above revealed that the

calabash “fruit and leaf extracts contain flavonoids such as quercetin and

anthraquinone, the important phytochemicals for antiangiogenic activities, a

process that inhibits the growth and development of new blood vessels in the

body.” Despite the research ethics board results, the proponents experimented the

finished product which is the Miracle Smoothie. The proponents had tasted it

numerous of times on different dates and time, and there was a feedback about

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their regular intake of the calabash juice. It has been tested by other Filipinos as

well for treating their illnesses. Thus, the proponents concluded it to be edible,

viable and feasible in all aspects. Likewise, it is also socially and economically

desirable.

RECOMMENDATIONS

In the light of the findings, the proponents RECOMMEND the

implementation of the “A Proposed Production and Distribution of Calabash

Smoothie.”

However, to improve sustainability and profitability, the following are further

recommended:

1. Extensive research and development of the calabash fruit such as:

1.1 The other possibilities of combining a variety of fruits with the

calabash fruit.

1.2 On the chemical reaction of the calabash fruit if mixed with different

varieties.

2. Aggressive advertising and promotion of the product being new in the

market with the presence of numerous and popular competitors.

3. Execute an agreement with suppliers of raw material to ensure regularity of

supply and reasonable price.

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Part I. Philippines: GIC Enterprises & Co., Inc.

• Peralta, J., Valix, C. (2015). Financial Accounting: Financial Accounting

Part II. Philippines: GIC Enterprises & Co., Inc.

• Peralta, J., Valix, C. (2015). Financial Accounting: Financial Accounting

Part III. Philippines: GIC Enterprises & Co., Inc.

• Raiborn, C.A., & Kinney, M.R. (2016). Cost Accounting. (2nd ed.).

Philippines:

• Roque, R., (2014). Management Advisory Services. Philippines: Roque

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treatment

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